The Motley Fool's Hidden Gems newsletter has a variety of criteria for selecting and evaluating small-cap stocks. Fellow Fool Brian Stoffel speaks to the selection criteria in his recent piece, so I'm going to focus on three metrics Hidden Gems analysts look at once they have selected a stock. Using four energy small caps, I will analyze insider holdings, free cash flow, and debt.

Insider holdings
Investors want to see company insiders buying up stock because it measures their faith in the business.  For small- and mid-cap companies, it's nice to see ownership range from 5% to 45% of shares outstanding. I used the screener over at Motley Fool CAPS to pull the following numbers:

Company

2011

ATP Oil & Gas (Nasdaq: ATPG) 14.9%
Clean Energy Fuels (Nasdaq: CLNE) 27.4%
Magnum Hunter Resources (NYSE: MHR) 13.5%
Vantage Drilling (AMEX: VTG) 37.2%

Source: Motley Fool CAPS.

All of these stocks meet the insider ownership threshold I set, with Clean Energy Fuels and Vantage Drilling generating particularly good feelings.

Free cash flow
The next metric on the checklist is free cash flow, which is simply cash flow from operations minus capital expenditures, and it is usually a good indication of a company's profitability.

Company

2010

2009

2008

ATP Oil & Gas ($635) ($476) ($370)
Clean Energy Fuels ($54) ($17) ($80)
Magnum Hunter Resources ($83) ($9) ($12)
Vantage Drilling ($550) ($341) ($176)

Source: Yahoo! Finance. Numbers in millions.

Yikes. Initially, these numbers look terrible and require further research. For example, Fool Isac Simon points out that Vantage Drilling grew revenue by 114% during the first quarter but reported a net loss of $18.6 million, largely because of expansion costs. Breaking out capital expenditures might help clarify the FCF numbers.

Company

2010

2009

2008

ATP Oil & Gas ($598) ($635) ($918)
Clean Energy Fuels ($51) ($30) ($78)
Magnum Hunter Resources ($82) ($13) ($16)
Vantage Drilling ($565) ($313) ($171)

Source: Yahoo! Finance. Numbers in millions.

Across the board, we see that just like with Vantage Drilling, capital expenditures are very closely tied to negative free cash flow numbers. At this point, investors need to make sure that a history of capital expenditures matches up with long-term growth.

Debt
Debt is the sort of thing that can ruin a company's future. There is such a thing as good debt, but too much of anything is never a great idea. The debt-to-equity ratio is a good way to compare the debt loads of companies of different sizes.

Company

Debt/Equity
ATP Oil & Gas 699%
Clean Energy Fuels 21%
Magnum Hunter Resources 19%
Vantage Drilling 148%

Source: Yahoo! Finance. Numbers as of most recent quarter.

The debt record for Vantage Drilling seems to support the idea that the company is rapidly expanding now. It has a lot of debt, but nowhere near as much as ATP.

Top dog
The winner of this quick exercise appears to be Clean Energy Fuels. All of these companies have negative free cash flow for growth purposes, but Clean Energy has a great insider ownership percentage and a reasonable amount of debt for a growing company. You don't need to write off the other energy companies listed here; they just don't look as promising based on these criteria.

These three metrics make a great starting point for research. Going forward, it would be a good idea to evaluate Clean Energy Fuels' management team, executive compensation structure, and its industry niche.

Interested in small-cap analysis? Click here for a special Motley Fool free report, "Too Small to Fail: 2 Small Caps the Government Won't Let Go Broke."

Fool contributor Aimee Duffy doesn't own shares of the companies mentioned in this article. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.