A 21-month run of rock-bottom interest rates have created a perfect environment for corporate bonds — and as bond yields fall, bond prices rise and investors and companies have made out like bandits. This has put so much cash in corporate coffers that cash (as a percentage of S&P 500 market capitalization and excluding financials) has soared from just 3% of market value back in 1999 to more than 12.5% today! This cash is burning a hole in the pockets of many companies, and they are starting to use it to make bids for other companies so they can grab market share and expand on the cheap.

That’s great news for small cap stocks with strong fundamentals, since these are always prime buyout targets. To help you position yourself for big gains this September, here are five top small cap stocks going strong:

Valeant Pharmaceuticals International (NYSE: VRX) develops drugs used to fight epilepsy, Parkinson’s disease, migraines, acne and even skin cancer. In August, VRX announced outstanding earnings for the second quarter including profit of $57.1 million, or $0.69 per share, compared with $0.52 per share in the second quarter of last year. Additionally, the company reported sales of $255.6 million compared with sales of $191.7 million in 2009. Those numbers tally out to a +9.5% earnings surprise and a +6.9% sales surprise!

VRX also recently received preliminary approval by the FDA for a new anti-seizure medications it is developing in conjunction with GlaxoSmithKline (NYSE: GSK). That paints a bright picture for the future of Valeant.

While the Dow Jones gave up almost -5% in August, Acme Packet Inc. (NASDAQ: APKT) moved decidedly in the other direction with a +20% gain. The communication company’s CEO recently discusses his company’s plans for the future, including a big push into Voice Over Internet Protocol (VOIP) to replace conventional phone networks. This move towards software and applications that exist above the IP-level rather than on physical routers will give Acme an edge over competitors like Cisco (NASDAQ: CSCO) and Juniper (NYSE: JNPR).

Radcom Ltd. (NASDAQ: RDCM) is an Israeli tech powerhouse that posted strong quarterly earnings last month. The test equipment and software company is benefiting from strong investor interest in the Israeli tech sector, one of the largest and fastest-growing in the world. The company recently announced that a leading Voice over Internet Protocol (VoIP) operator purchased its Next Generation Networks Service Assurance solution. The VoIP operator boasts a few million subscribers and will use Radcom’s solution to monitor customer experiences on its networks.

Netflix Inc. (NASDAQ: NFLX) announced spectacular earnings results for the second quarter, and for the third quarter the analyst community is expecting another blowout performance. The company’s sales are predicted to rise +30% and earnings are forecast to grow +38%. As a sign of confidence in its stock, Netflix recently announced a $300 million stock buyback plan that will implement through 2012. This stock has had a red-hot run in recent months, including gains of +140% year to date. But the run isn’t over yet, and I’m recommending investors buy Netflix at any price below $140.

WebMD Health Corp. (NASDAQ: WBMD) has reversed its fortunes of previous quarters with the announcement early in August that it returned to profitability. The Internet company, which publishes information on health and wellness, posted earnings of $7.7 million, or $0.13 per share, much improved from last year’s loss of $11.7 million, or $0.25 per share, in the equivalent quarter. Analysts had predicted earnings of $0.12, resulting in an 8.33% earnings surprise! The company is forecasting sales in excess of $133 million for the third quarter with continued growth in its advertising business. Shares are up +33% year to date and I expect the run to continue.