BusinessWeek Hot Growth Companies 2006        April 28, 2006
The price after the stock is the price on April 28, 2006. 

1

VAALCO Energy (EGY)  $7.10

Unlike most small independent oil outfits in the U.S., Vaalco Energy prefers to look for oil in faraway places, like the Atlantic Ocean off West Africa. Increased production from its main field off the shores of Gabon -- and sharply higher oil prices -- have boosted sales by 81/2 times since 2002 turned a big loss in 2001 into steadily increasing profits. Last year, the Houston-based company earned $29.2 million on sales of $84.9 million. Its stock, which didn't even fetch 20 cents a share in mid-2000, has been as high as $7.82 this year, though it's slipped from that April peak to about $6.50. With stronger reserves and a steady cash flow, Vaalco plans to expand its production in Gabon and is placing new bets in Angola and the North Sea. For a little guy, it gets around.

2

Hansen Natural (HANS) $129.46

The burgeoning popularity of energy drinks is delivering quite a buzz to Corona (Calif.)-based Hansen Natural. Its tall, testosterone-ized cans of Monster (slogan: "Unleash the beast!") are stealing market share from category leader Red Bull and frustrating Coke and Pepsi, who despite their influence lag way behind. The proof is in Hansen's profits, which have skyrocketed from 28 cents per share in 2003 to what analysts predict will be nearly $4 this year. The company's shares have jumped 6000% in that time to a staggering $140 a share. That surging growth would have been inconceivable just a few years ago, when Hansen was merely a sleepy maker of natural sodas and juices. Chief Executive Rodney C. Sacks and a partner bought the company for $15 million in 1992; it is worth $3 billion today.

3

Palomar Medical Technologies (PMTI)  $42.19

If the mantra of the Baby Boom generation is to grow older without showing it, then Palomar is in prime position to cater to this aging but burgeoning market. The company, founded in 1987, was one of the first to win Food & Drug Administration approval for a laser-based hair-removal machine, and the technology continues to be a favorite among patients and physicians. Palomar's technology uses pulsed light -- bundles of energy -- not only to remove hair, but also to smooth wrinkles and erase unsightly veins. In 2005, the Burlington (Mass.)-based company's sales flew 40% to $76.2 million, while net income shot up 70% to $17.5 million. Product-development deals with Procter & Gamble's (PG) Gillette unit and Johnson & Johnson (JNJ) could boost Palomar's profile in the growing market for age-defying products.

4

W&T Offshore (WTI) $42.69

W&T Offshore was off to the races in its first year as a public company. In fiscal 2005, it reported a 37% increase in profits -- solid considering that some production was deferred in the wake of hurricanes Rita and Katrina. But W&T stood out for its exploration record, successfully drilling 17 of 22 exploration wells and adding some 5% to its petroleum reserves. CEO Tracy W. Krohn, who founded the company in 1983, also managed to flex W&T's new financial muscle. He invested in several new Gulf of Mexico wells for future drilling, including some promising Kerr-McGee properties. Investors don't seem worried that the company is totally dependent on its projects in the storm-vulnerable Gulf. Based on W&T's exploration record and the high price of oil, they have pushed the stock to $40, more than double its initial public offering price.

5

NAVTEQ (NVT) $41.52

It makes sense that a map company would be forging a clear path to growth. And that's been the recent course for Navteq, which makes digital maps for automobiles, mobile devices, and Internet sites. The Chicago company's biggest driver: navigation systems in many new rental and luxury cars. Navteq increased its revenue 26% in 2005, to $496.5 million, from $392.9 million in 2004, while more than tripling net income, to $170.8 million, from $54.1 million. Stock-based compensation expenses have hurt recent earnings, but the horizon still looks bright. Navteq, 37% controlled by Philips Electronics until 2005, continues to make acquisitions of global mapping companies that have broadened its geographic reach to include Malaysia and Korea. But Navteq might need a better map itself. In late April, the company reported a decline in first-quarter earnings, sending its shares plunging 18%

6

Under Armour (UARM)  $36.78

Eleven years ago, college football player Kevin Plank got tired of changing the heavy, sweaty cotton T-shirts under his jersey. He devised a skin-tight synthetic shirt that wicked away sweat -- and tapped into a deep unmet need among athletes. Now, Under Armour is the king of the "compression" athletic apparel market, reaching all the way down to the elementary-school playground, where its $20-$40 T-shirts and turtlenecks are must-have items. Meanwhile, CEO Plank has branched out to offer everything from gloves to duffel bags. That has helped send sales soaring 56% a year since 2002, to $271.3 million in 2005. Earnings have skyrocketed 85.2% a year in that time. And when Under Armour went public on Nov. 18, 2005, giddy investors pushed shares from $13 to $31. Competition from the likes of Nike is likely to cause Under Armour's torrid revenue growth to moderate, though analysts still expect it to chart an impressive 20% annual growth per year going forward.

7

VASCO Data Security Intl. (VDSI)  $9.36 

Computer-security worries are driving big gains for Vasco. The Oakbrook Terrace (Ill.) outfit makes hand-held "tokens" that customers of banks and other financial outfits use to generate one-time passwords so they can access their accounts securely online. Vasco's gizmo looks like a cross between an electronic car-door opener and a calculator. Already hugely popular in Asia and Europe, the devices may soon proliferate in the U.S., via such banks as Wachovia and HSBC. Last year alone, Vasco shipped more than 7 million tokens, helping drive a 137% rise in net income, to $7.7 million, on an 83% gain in sales, to $54.6 million. Pressure from U.S. regulators to tighten security could further ratchet up growth this year. And additional growth could come from Vasco's new software product that would replace the tokens with "cookies," which banks will be able to send online straight to customers' computers.

8

Programmer's Paradise (PROG) $12.80

Getting technical software into the hands of large-scale information-technology developers is paying off for Programmer's Paradise. Its catalog has long been popular with small developers, but recently the company has seen rising popularity with larger clients, such as Lockheed Martin, Capital One, U.S. Bank, and the U.S. Patents & Trade Office. This has paid off in average annual earnings increases of 372.7% over the past three years. Programmer's Paradise has recently added onsite IT services, database-development and lifecycle-development tools to its menu, helping to add energy and longevity to Programmer's Paradise. The company has also successfully reinvested capital in marketing and other key functions. To keep moving at this rate, the company just needs to find enough engineers.

9

LCA-Vision (LCAV)  $56.16

A little drama can really shake up a small company, as LCA Vision learned the hard way. In February, founder Stephen N. Joffe -- a pioneer in the field of Lasik vision correction and founder of LCA -- bought a 7.7% stake of competitor TLC Vision Corp. (TLCV). Ultimately he left LCA and was replaced by none other than his own son, Craig, who is serving as interim CEO. The incident added to a continuing stock price decline, from $55 in February to just over $40 in mid-March. Now the stock has recovered, thanks to the junior Joffe's reassurances that the company's growth is solidly on track. LCA, which operates a chain of LasikPlus eye surgery clinics, is experiencing such strong demand for the procedure that its profits have grown an average of 109% a year for the past three years, as sales have jumped 47% a year.

10

Blue Nile (NILE) $34.80

Think this Seattle-based online jewelry store isn't shaking up the diamond business? Ask Zale (ZLC), whose brick-and-mortar stores have been among the Net retailer's biggest victims. Blue Nile is now the largest seller of engagement rings in the U.S. Zale replaced its CEO amid 25% profit declines. The key is Blue Nile's hyper-low operating costs: the company's single warehouse sells as much jewelry as nearly 200 stores would combined. That means prices are often 35% less than competitors' and operating margins are still better. Sales rose 20%, and profits climbed 32% in 2005. Nile, however, has its own issues: It has seen pressure on its gross margins in recent quarters, and struggled to manage advertising costs. Wall Street is divided on its stock. Citigroup analyst Mark Mahaney calls Blue Nile the best small-cap Net stock. But CNBC's Jim Cramer, asked recently on the air about NILE, bellowed "EXPENSIVE."

11

Volcom (VLCM) $ 35.67

Clothes for skateboarders and surfer dudes are hot right now, and few companies are riding that wave higher than Volcom Inc. The company was founded by CEO Richard "Wooly" Woolcott and friend Tucker "T-Dawg" Hall during a 1991 road trip to Tahoe. It was capitalized with $5,000 of Woolcott's father's money. Today the company embodies the term "lifestyle brand" by sponsoring surfers, snowboarders, artists, and filmmakers. Volcom also runs its own record label and operates a private skate park at its headquarters. The strategy pays off as sales of Volcom's T-shirts, corduroy pants, and swim trunks have doubled revenues in the past two years, to $160 million. Profits are up by a similar amount, to $29 million.

12

American Science & Engineering (ASEI) $85.71

American Science & Engineering makes the latest in X-ray gear for scanning luggage at airports or vehicles at border crossings. But the 48-year-old company's diverse product line blurred its focus until CEO Anthony Fabiano was recruited in mid-2003. Sales were stagnant over the three previous years, but jumped more than 40% over the next two fiscal years through Mar. 31, 2005 -- and then more than doubled to $122 million in the last nine months of 2005. Likewise, profits have skyrocketed to $25 million in the last nine months of 2005 from less than $2 million a year earlier. One reason: government orders of Z Backscatter vans, which can peer inside vehicles and buildings from inside a moving delivery truck. But American Science's share price, which more than doubled in a year, is getting a little too flashy for some investors. Fidelity Investments cut its stake to 5% from almost 10% this spring.

Motley Fool - ASEI Missed the Mark 

May 22, 2006 by Anders Bylund  $59.99

It happens to every company sooner or later: Wall Street sets a mark for quarterly earnings, and the company misses that goal. Sometimes an earnings stumble is a signal to sell, but digging in the dirt is also a good way to find turnaround candidates while they're getting beaten down. Today, we'll pick apart another week of market negativity to X-ray one unfortunate Rule Breaker, play games with another, and debug a storied software maker. See whether you can spot the common thread today.

Today's first stumbler is American Science & Engineering (Nasdaq: ASEI), makers of backscatter X-ray devices that can see through your clothes without looking at your bones. The company's results were apparently not that transparent to Wall Street analysts, who had expected $37.8 million in sales for the quarter and $0.76 of earnings per diluted share. Actual results beat the sales estimate handily at $40.8 million but fell far short of the earnings goal, with only $0.51 per share.

So what happened? There was clearly no problem with the demand for the security and inspection systems, as evidenced by the sales figure. I can see two items that may have slipped by our analyst friend: an income tax charge not present last year (though that should have been expected) and a $4 million writedown of warrant valuation.

Warrants are a form of stock options, and it can be hard to predict the gyrations of options values and expirations. I'd feel safer if the company reduced their exposure to unpredictable market changes, but if that's the worst problem on board this ship, it still looks seaworthy.

13

ASV (ASVI) $25.00

ASV has dug out a strong position in the market for compact loaders -- small machines with hydraulic shovels to move dirt and construction materials at building sites. Over the last three years, its compounded annual earnings soared an average of 165% on a 75% increase in average annual sales. While it goes head to head with industrial giants such as Ingersoll-Rand with its Bobcat excavators, ASV has an edge: Its equipment runs on rubber tracks using much the same technology that ASV co-founder Edgar Hetteen used to start snowmobile makers Polaris and Arctic Cat. Tracks boast greater traction and disperse weight better than four-wheeled loaders, making them ideal for delicate work on golf courses or vineyards. So good is its track technology that ASV makes the undercarriages for Caterpillar's compacts, and Cat has bought a 23% stake in ASV. This year, demand might slip as home building slows, but ASV is counting on an expanding dealership network and new models to pull it ahead.

14

PeopleSupport (PSPT) $10.75

Everybody knows about outsourcing technology services to India, but PeopleSupport has found a different source. The Los Angeles-based company keeps the bulk of its workers in the Philippines, where it employs 5,000 college-educated, English-fluent staffers. The company books travel reservations, connects people with Internet access, and provides debt-collection services for large U.S. tech clients such as Expedia and EarthLink. It's a formula that has helped company CEO Lance Rozensweig triple its revenues in the past two years from $19 million to $62 million. Operating at a loss as recently as 2002, the company earned $22 million in 2005. This year PeopleSupport added transcription and captioning services and added a new country, Costa Rica, where its customer-service reps also speak Spanish.

15

Imperial Industries (IPII) $25.09

Oh, to be a building-products supplier in one of the fastest-growing regions of the U.S., the Southeast -- a hurricane zone, to boot. That's the win-win enjoyed by Imperial Industries last year. Booming home construction, especially in Florida and Georgia, plus soaring demand for building materials after four major hurricanes, helped propel the Pompano Beach (Fla.) company's profits up 31.4% in 2005 on a 30.7% increase in sales. Though rising interest rates are beginning to crimp new housing starts, the hurricane rebuilding effort along the Gulf Coast and in Florida continues. To tap that demand for its roofing, plaster, insulation and masonry products, the company opened a brand-new facility in Alabama in February, and executives say they are exploring further expansion.

16

Cognizant Technology Solutions (CTSH) $63.61

This information-technology service provider is a five-time alumnus of BusinessWeek's Hot Growth ranking. Over the last three years, it has enjoyed 69.4% average annual growth in earnings. Steady operating margins of about 18% leave room for heavy reinvestment in Cognizant's main areas of expertise: the financial, insurance, and health-care industries. Strategic partnerships with fast-growing clients bring in between $5 million and $40 million in revenues per client per year. Revenues from new clients are growing about 60% a year -- way above the industry average of 40% -- according to Goldman Sachs. To meet that demand, Cognizant hired a record 9,000 employees last year.

17

Multi-Fineline Electronix (MFLX) $58.28

Operating not far from Disneyland, this maker of flexible, printed circuit boards for electronic devices allied with Motorola (MOT) in 1990 and has been on a mostly upward thrill ride ever since. Today, Multi-Fineline gets 81% of its revenues from Motorola's cell phone, which has helped nearly triple revenues since 2003 to $357.1 million in fiscal 2005. Profits in that time have grown nine-fold to $37.2 million. The company also provides circuits for IBM's (IBM) data-storage devices, Palm's (PALM) PDAs, and medical equipment from General Electric (GE). Controlled by Singapore-based WBL, Multi-Fineline recently announced it would pay $500 million in stock and cash to buy an Asian competitor, MFS Technology, which is also controlled by WBL.

AP  May 10, 2006 4:29pm ET:   Multi-Fineline Electronix Inc., down $17.32 at $42.15 Baird & Co. analysts downgraded the chipmaker to "neutral," citing concerns about declining revenue growth, weak cash flow and its planned acquisition of MFS Technology Ltd.

18

Hittite Microwave (HITT) $38.91

Ever more complicated computer chips are making their way into more places, allowing for new applications such as "intelligent" cruise-control systems in cars that automatically slow a vehicle as it approaches oncoming traffic. Hittite Microwave has a hand in many of those markets, as a sought-after designer of integrated circuits. The company doesn't actually make microcircuits, a task that requires multibillion-dollar fabrication plants. Instead, Hittite leverages its engineering expertise to design chips for everything from cable modems to space satellites. The company's shares have nearly doubled since its initial public offering last July. Over the last two years, revenue almost doubled to $80.7 million in 2005 from a year earlier, while profits tripled to $20.1 million. The Chelmsford (Mass.) company even expanded its enviable gross margin from 63% to 68%. As more devices get more smarts, Hittite's engineering prowess will be in even more demand.

19

OmniVision Technologies (OVTI) $29.50

It's no wonder equipment makers are snapping up Omnivision's products like crazy. A picture is worth a thousand words, and Omnivision's image sensors are becoming de rigeur in everything from camera phones and cars to personal computers and toys. The Sunnyvale (Calif.)-based company's products offer image capture up to 5 megapixels, image processing, color processing and conversion, and output in either digital or analog to computers and televisions. Take a look at its financials: Sales have jumped eightfold in the last three years, to $388 million in fiscal 2005, which ended Apr. 30. Meantime, Omnivision swung from back-to-back losses in 2001 and '02 to record profits of $76.4 million. The company's stock is hovering at a 52-week high on hopes that a new chip will be picked up by top consumer-electronics makers, though one analyst cautions cutthroat competition may cut into its juicy 23% operating margins.

20

NutriSystem (NTRI) $67.86

This weight-loss operator has slimmed down?and prospered. NutriSystem used to operate a nationwide network of weight-loss centers. The company began shuttering those in the 1990s completed the overhaul in 2003, after a new management team took over. Under that team, led by chairman and CEO Michael J. Hagan, NutriSystem began emulating insurance operator Geico and computer maker Dell by creating a low-cost weight-loss business. NutriSystem has no membership fees and no stores. Instead, customers pay about $289 per month for prepackaged meals, plus phone or Web counseling. That means most customers can do the NutriSystem program for about $10 a day, well below the $15-or-more-per-day cost of rivals. Average annual sales and profits over the past three years have jumped 94.4% and 101%, respectively. And the only people getting fat are investors: The stock was trading under $1 a share when Hagan's team came on board in 2002, and it's now at about $48.

21

Resources Connection (RECN) $26.88

Created from a leveraged buyout by former Deloitte & Touche partners, Resources Connection provides CPAs to companies that need help complying with Sarbanes-Oxley disclosure requirements. The Costa Mesa (Calif.) firm has seen its business more than double since 2003. The takeover boom has also produced piles of due-diligence work for Resources Connection's 2,600 professionals, who last year worked for more than 1,900 clients, including all of the Big Four accounting firms and half the Fortune 100 companies. With more than 49 U.S. offices, Resources Connection has been on an acquisition binge since 2003, adding branches -- and more outsourcing muscle -- in Australia, Sweden, and the Netherlands, as well as opening a new office in Paris. It's no surprise, then, that its sales have soared an average of 46.9% a year for the past three years, while profits have jumped 74.3%

22

EFJ (EFJI) $6.83

When it comes to wireless communications, EFJ is serious about security. The Irving, Texas-based developer of secure radio and wireless systems reported huge gains last year in its voice encryption services used by U.S. soldiers in Iraq. Through Voice-over-Internet-Protocol, or VoIP, technology, the company is bridging the gap between analog and digital systems, making it easier for federal and local emergency response teams to work together. And with the likelihood of more natural disasters ahead, demand for EFJ's technology is way up. Sales reached $95 million in 2005, and over the past three years, average annual profits rose 151%. Beyond those in the private sector, key customers include the Department of Homeland Security, the Department of Defense (which has accounted for about a third of revenues since 2004), and the New York Police Department.

23

InfoSonics (IFO) $ 19.75

One of the cell-phone industry's largest distributors, San Diego-based Infosonics decided in 2004 that its future was south of the border. So it dumped its business of providing phones to mostly U.S. retailers and began providing phones from Samsung, Motorola (MOT), and others to Latin America from a 22,000-square-foot warehouse in Miami. In April, it leased another warehouse in Mexico to take advantage of that country's fast-growing market of more than 47 million cell-phone users. Sales have grown at an average 42.5% clip per year since 2002, and over the past 12 months, the 28-person company generated $145.8 million in sales and eked out a profit of $2.3 million.

24

Amedisys (AMED)  $35.99

When William Borne and two others started Amedisys with $1,500 in 1982, they were in some ways ahead of their time. Most home-nursing services were provided by nonprofit outfits, but Borne -- now CEO of the Baton Rouge-based company -- figured for-profit companies could have a big role in caring for the nation's growing population of elderly. He was right: Amedisys has grown into a network of 221 Medicare-certified facilities in 16 Southeastern states; profits have more than tripled since 2003, to $30.1 million last year. Amedisys isn't without its challenges, however. Its stock took a 24% plunge in late February after reporting fourth-quarter earnings that were below analysts' expectations and disclosing that its chief financial officer was unexpectedly departing. Still, some bulls see large stock purchases by company execs as a sign that they're still bullish about the future. 

25

LifeCell (LIFC)  $26.45

It's been a bit of a roller coaster for LifeCell. The biotech company has been riding high in recent years--with sales up an average 41% a year over the past three years and profits up 72% annually--thanks to its human tissue product AlloDerm. LifeCell takes donated human tissue and strips out the cells that would cause recipients to reject it as foreign. It is then used to perform surgical procedures including complex hernia repairs. But last fall, LifeCell got caught up in a gruesome scandal involving a tissue bank that allegedly harvested tissue from deceased individuals who had never consented to be donors. A resulting investigation by the Brooklyn District Attorney resulted in the indictment of four individuals. While not implicated in the alleged conspiracy, LifeCell obtained cadaver material from the tissue bank in question and has now been named in a number of lawsuits. The company says it will defend itself against the lawsuits and also says it has not received reports of disease transmission.

26

RPC (RES)  $23.01

At a time of skyrocketing fuel prices -- and the eager search for more energy reserves -- there are few better businesses to be in than oil and gas services. RPC knows. The Atlanta company provides a range of technical and support services, such as pressure pumping, well control, pipe inspection, and oilfield training, mostly to independent oil and gas companies operating in the U.S. Profits at the 22-year-old company have jumped 147% on average over the past three years, from a $5.3 million loss in 2002 to $66.5 million in net last year. Over that same span, revenue has doubled to $427.6 million. And investors looking for stellar returns in the booming business have sent RPC's stock price up more than 200% in just the past year, pushing its market cap over the $2 billion mark. Demand for its oil and gas services, it seems, is turning into a gusher.

27

PetMed Express (PETS)  $13.20

What hasn't killed PetMed Express has only made it stronger. The online seller of pet medications and supplies has survived regulatory challenges initiated by veterinarians who felt PetMed's Internet-based business cut into their sales of pet drugs to their customers. At the same time, the Pompano Beach (Fla.) company had to win over major pharmaceutical companies -- reluctant to create friction among veterinarians -- to sell their products over PetMed's Web site. But PetMed Chairman and CEO Dr. Marc Puleo persisted. His persistence has paid off for the company, which he founded in 1996. Revenue has skyrocketed from $10 million in 2001 to $108.4 million in 2005, and net income along with it. After suffering a $2.8 million loss in 2001, PetMed earned a tidy $8 million profit last year. Meantime, its share price has zoomed from around $2 to almost $16 today. Just what the doctor ordered.

28

NeuStar (NSR)  $ 32.79

Little-known NeuStar has reaped millions of dollars in federal contracts as an integral player in the government's domestic spying program. The Sterling (Va.)-based telecom company, which raised $605 million in its June 2005 IPO, manages all telephone portability within the U.S., transferring numbers from one carrier to the next. It's what allows customers to change telephone services without changing phone numbers. NeuStar, whose master directory of numbers tracks where calls are routed to, call times, and changes in service, also records Internet addresses that accompany each phone number and has been working closely with the government to develop a technology designed to track people down at home, on their mobile phone, or via e-mail by typing a single phone number on the Internet. NeuStar beat estimates in the first quarter, reporting $76.2 million in revenue, a 31.8% jump from a year earlier. It also raised its outlook for 2006, expecting as much as $324 million in revenue instead of up to $306 million.

29

Netflix (NFLX) $ 27.65

If you want to kill this online DVD-rental service, you'd better drive a stake through its heart, Dracula-style. Netflix shares plunged 80% after video-store giant Blockbuster entered the online business in 2004. But Netflix roared back: 2005 sales rose 36%, profits doubled to $40 million, and shares have tripled since early last year. Now, stores are hurting: Blockbuster and Movie Gallery lost a combined $1 billion last year. Netflix is branching into film distribution, buying rights to 140 films in an effort to boost the market for smaller films its 5 million subscribers choose more often than new releases. And it's spending millions on R&D to prepare to deliver movies over the Internet. The goal: 20 million subscribers by 2010 to 2012, and 50% profit growth each of the next three years.

30

Ceradyne (CRDN) $ 47.03

In The Graduate, Dustin Hoffman was told the future lay in plastics. Joel Moskowitz heard ceramics. The CEO of Costa Mesa (Calif.) Ceradyne Inc. makes high-performance ceramics for everything from orthodontics to automotive applications. But the real driver in the past few years has been the defense industry, where Ceradyne's products are used in the bulletproof vests and other types of armor that are critical to saving soldiers' lives in Afghanistan and Iraq. In the past two years, Ceradyne has seen its earnings quadruple, to $46 million, on sales of $368 million. The company is currently shipping its body armor at a rate of 16,000 units a month.

31

MEMC Electronic Materials (WFR)

When it comes to semiconductors, most people think of Intel or Texas Instruments. But those giants, which make computer chips for everything from cell phones to microwaves, would be nowhere without MEMC Electronic Materials. MEMC makes the fundamental building blocks, called wafers, on which these chips reside. And simply put, MEMC is on a tear. Over the past 12 months, its shares have nearly quadrupled from about $11.75 to more than $42 today. Earnings have surged from a 2002 loss to $338 million, while sales have climbed 63% during that period to $1.1 billion. The main driver has been MEMC's focus on innovation. MEMC holds more than 500 worldwide patents on silicon products and processes and has more than 350 worldwide patent applications on file. And management is always looking ahead: In April, MEMC announced an eight-year deal to supply solar wafers to Motech Industries worth at least $1.6 billion in revenue.

32

Empire Resources (ERS)

It was a good year for aluminum distributor Empire Resources. Despite rising energy costs and an unnerving cyclical market, the demand for aluminum was strong across several industries from transportation to housing to appliances. Headquartered in Fort Lee, N.J., the company saw its net income jump 98% on higher pricing and bigger orders from places like Canada, Europe, and Australia. That breaks down to an average 50.3% average annual profit growth over the last three years, which Empire Resources achieved by streamlining its shipping operations and moving metal on a "just in time" basis.  

33

Gevity HR (GVHR)

For small and medium-sized businesses, often operating on a shoe-string budget, finding the right staff -- and managing the paperwork to employ them -- can be a real headache. That's where Gevity comes in. The Bradenton (Fla.) company helps entrepreneurs cut down on the bureaucracy of human resources with a combination of services: finding the right talent, processing their paychecks and company taxes, and ensuring firms' compliance with government regulations. It's a nifty niche. Profits at Gevity have jumped 102% on average over the past three years, to $37.4 million in 2005 in revenue of $608.8 million. In 2005, the number of Gevity-supplied employees who stayed with client companies jumped to 82.5%, from 77% in 2004. And the addition of UnitedHealthcare as a health-insurance provider expanded its network of reputable providers. Add it all up, and the company promises double-digit growth in 2006.

34

Berry Petroleum (BRY)

Berry Petroleum traces its roots back to 1909 and the fertile fields of California's San Joaquin Valley. Company founder Clarence Berry was a farmer from Fresno, who first struck it rich during the Alaskan gold rush. Although the company has expanded since then into Utah, Colorado, and North Dakota, it's still based in Bakersfield, and 88% of its reserves lie in the Golden State. Berry's focus is heavy oil -- a viscous blend of crude that requires special techniques to coax it from the earth. As such, it's appropriate that CEO Robert Heinemann is a former chief technology officer at oil services giant Halliburton. With crude prices on a tear, Berry's profits have tripled in the past two years, to $112 million, on revenues of $400 million. Old Mr. Berry would be proud. 

35

Endo Pharmaceuticals Holdings (ENDP)

When Endo got its pain-relieving patch Lidoderm approved by the U.S. Food & Drug Administration in 1999, the pharmaceutical company thought it would address a tiny market of 200,000 people who suffer pain related to shingles. But the product has been snapped up by everyone from weekend warriors with occasional back pain to office workers who have carpal tunnel syndrome. Clearly pain pays: In the quarter ended Mar. 31, Endo reported 48% sales growth and 50% earnings per share growth. The company expects sales of Lidoderm to skyrocket 26%, to at least $530 million. Endo is working on several other pain-relieving products, hoping to address a range of age and disease-related disorders, including cancer and neuropathic pain.  

36

Cimarex Energy (XEC)

Even hurricane-related disruptions in the Gulf of Mexico weren't enough to shut down growth at this Denver oil and gas producer. The outfit, which works wells in the gulf and across West Texas and New Mexico, was helped by its midyear acquisition of Magnum Hunter Resources for $2.1 billion in stock and the assumption of debt. That helped drive net income and revenues, both of which more than doubled, with net income rising 113% to $328.3 million while revenues jumped 135% to $1.1 billion. Gas production rose 77% in the final quarter of the year alone, while oil volumes leapt 125%, despite reductions in the gulf. Repairs to the last of its damaged facilities, along with additions from Magnum, should help power still more gains this year. Investors have prospered. The company went public at $17.25 a share in late 2002. The stock now trades for more than $40.

37

Alliance Resource Partners (ARLP)

Mining coal can be dirty, dangerous, and expensive, but it can also be a growth business. Just look at Alliance Resource Partners, which has strung together six record years and expects to continue the streak. Its profits, in fact, have jumped 4.5 times since 2002 to $160 million on $838.7 million in sales in 2005. The nation's only publicly traded master limited partnership that produces and markets coal, Alliance has been a huge beneficiary of strong demand -- and rising prices -- for its coal, which comes from underground mines in Appalachia and the Midwest. Alliance has also done a good job of replacing production from aging mines. In April, it announced a plan to invest up to $130 million to develop a 24,600-acre reserve called River View in Union County, Ky. With demand moving higher as electric utilities invest in scrubbers enabling them to burn high-sulfur coal, Alliance expects to have ready customers when River View starts producing in 2008.

38

VSE (VSEC)

Thanks to old U.S. Navy ships and leaky U.S. Army tanker trucks, VSE had a very good 2005. The Alexandria (Va.) defense contractor saw big increases in revenues -- $280.1 million vs. $216 million in 2004 -- as well as in profits, which leaped 79% to $6.2 million. But the 46-year-old engineering firm has most of its eggs in one basket. Nearly half of VSE's business is refurbishing and transferring decommissioned Navy ships to foreign governments, such as Taiwan. In April, 2005, VSE inked a new five-year, $544 million contract to continue that work. Another third comes from work for the Army in Iraq and Afghanistan, coating tanker trucks with a sealant that stops leaks when the vehicles are hit by small arms fire. VSE's share price topped $50 in February, but has slumped to around $35 in May. Still, that's a nice return on a stock that fetched less than $15 a share only 30 months ago.

39

Chico's FAS (CHS)

Chico's knows its customers, that's for sure. The apparel chain, which caters to middle-aged women, sells its original designs in just four sizes: 0, 1, 2, and 3. And it doesn't outfit its dressing rooms with mirrors, meaning customers trying on clothes have to step out for a look-see -- where they find a sales rep holding accessories that would go well with that skirt. Chico's formula continues to work: Profits rose an average 42.5% annually over the past three years on an average 38% yearly increase in sales, a performance aided in small part by its 2004 acquisition of White House/Black Market, another women's boutique chain. Shares of Chico's have risen from just above $10 in spring 2004 to just under $50 in February. But the stock has since slid back to $30, after Chico's missed its first-quarter earnings estimates by a penny. An expensive miss, indeed.

40

Build-A-Bear Workshop (BBW)

Build-a-Bear Workshop continues to roar. Despite tough competition across the globe, the St. Louis stuffed-animal chain has managed to claw out double-digit growth, jumping 20% in the previous year, to $361.8 million in 2005, and is expecting another near 20% leap in 2006. Net income grew even faster, rising 36%, to $27.3 million from $20 million. One reason for the good fortunes come from CEO Maxine Clark's voracious appetite. She has expanded the company to 200 stores in 43 states and Canada, with 30 more outside North America. Clark also acquired Bear Factory, a British teddy-bear-stuffing retailer, in April. That's expected to help fortify Build-A-Bear's global position. The challenge will be to fight off others gnawing at Build-A-Bear's heels. Animal-stuffing machines, in fact, are now being sold online for a few thousand bucks, which means rivals could pounce from anywhere.

41

St. Mary Land & Exploration (SM)

Drilling successes, coupled with boffo oil and gas prices, are making St. Mary a gusher. The Denver-based outfit, which operates across the West and Southwest, can boast of a novelty in the drilling business -- 100% success rates -- in some of its fields. It took part, for instance, in sinking 26 wells in one Montana county that all turned out to be productive. Other areas, such as efforts in North Dakota, were disappointing. But overall, high-performing spots, such as the natural-gas fields in the Hanging Woman Basin in Wyoming and Montana, helped drive up earnings 64%, to $151.9 million, on a 71% rise in revenue, to $739.6 million. Net of hedging, St. Mary reaped a 57% gain in price per barrel of oil, realizing an average price just under $51. Even if oil prices slip this year, recent successes in drilling should power more gains.

42

Hurco (HURC)

Who says you have to be big to be multinational? Hurco, which makes computerized machine tools primarily for metal fabricators, booked two-thirds of its sales from outside the U.S. last year and actually builds its products in Taiwan. The Indianapolis-based company got pummeled during the factory-sector recession in the early 2000s. New management, led by Chief Executive Michael Doar, sold off underperforming lines. The new focus, combined with an upswing in industrial orders, has put Hurco on the fast track. Sales grew 77% over the last three years to a record $125.5 million in fiscal 2005, which ended last Oct. 31, while profits swung from back-to-back losses in 2001 and 2002 to $16.4 million, an all-time high in the company's 37-year history. Hurco also widened its gross margin to 33.9% from 30.4% a year earlier.

43

Unit (UNT)

Forget tricky international supply chains; Unit is getting its oil right here. Headquartered in Tulsa, the oil and gas drilling company operates in locales from Colorado to Louisiana. Its three subsidiaries -- Unit Drilling Unit Petroleum and Superior Pipeline -- got a boost as oil prices climbed from an average $37 per barrel in 2004 to an average $50 in 2005. The company started in 1963 with just three rigs. Over the past three years, Unit's annual profit growth jumped an average 122%, to a record $212.4 million on $885.6 million in revenue, also an all-time high. And with new rigs sprouting up every month, the company's lucrative operations show no signs of slowing down. Last year, it spent more than $100 million on oil and natural gas properties in Oklahoma, Arkansas, and Texas. Shareholders are pumped for more hot growth to come.

44

Barrett Business Services (BBSI)

Barrett has found a market turning employers' pain into its gain. The Vancouver (Wash.) company works as a "professional employer organization," managing critical human resources functions for clients such as payroll processing and benefits management. But the real key is its handling of workers compensation. That's important, because in states such as California, many employers complain that it's too costly to care for their own workers' comp programs. As a result, more are turning to Barrett, which can cut their costs. Barrett, founded in 1965, has been run by William Sheretz since 1980. After a loss in 2002, the company posted a sixfold boost in earnings from 2003 to 2005. It has continued its growth spurt this year. The company, which also handles temp staffing, posted 46% earnings growth, to $1.4 million, in the first quarter on sales of $58.3 million, a 19% gain.

45

Encore Wire (WIRE)

Copper prices soared in 2005, but that didn't close the curtains on Encore Wire. A Delaware corporation based in McKinney, Tex., the low-cost manufacturer of copper wire and cable saw the price of its chief commodity jump 28%. Despite higher production costs, net sales rose by 26%, pushing total revenues to $758 million. Thanks in part to a hungry housing market, average annual profits have risen 106% over the past three years. Encore's strategy: maintain sufficient inventories for lightning-fast delivery to customers, mostly wholesale electrical distributors that like to save money by keeping inventories low. When a 160,000 square feet expansion opens later this year, Encore will be ready for a second act.

46

Ansoft (ANST)

Technology never sits still -- at least, not while Ansoft is driving the pace car. The Pittsburgh software maker helps engineers design high-performance electronics for everything from laptops to tanks to spaceships. And as those products grow in complexity and shrink in proportion, demand for the company's technology is taking off. Earnings climbed 130% in 2005, thanks in part to booming sales of cell phones, which rely on Ansoft's wares to sort out interference, and hybrid cars, which use them to max out mileage. By extending itself to a broad range of applications and continuously entering new markets, the company has averaged 136% growth in annual profits since 2002. A top-flight R&D department is working hard to keep the company's growth on a strong upward curve.

47

Sonic Solutions (SNIC)

Simply put, Sonic Solutions helps put the DVD into digital media. That's important, since millions of consumers who now capture their Kodak moments and home movies in bits rather than on film still want to store their creations in a form that will survive long after their PC has crashed. The company, founded in 1986 and publicly traded since 1994, also sells far pricier software to movie makers, from the indie film crowd to big Hollywood studios. They all need tools to get the best high-definition clarity and to add interactivity in the years to come, such as the ability for a studio to lead viewers to a trailer for a sequel or other updated material. Sales hit $90.6 million in fiscal 2005, which ended Mar. 31, almost three times as high as 2003's revenue. One risk to future growth, however, is the impending "VHS vs. Betamax" style standards war between two competing high-def formats, Blu-Ray and HD-DVD.

48

Reliv International (RELV)

Reliv International has been publicly traded for 13 years, but the marketer of nutritional and diet powders still functions a lot like a family business. Run by Chairman and CEO Robert Montgomery, who founded Reliv in 1985, the Chesterfield (Mo.) company employs sons R. Scott and Ryan as senior executives. Montgomery's son-in-law, Ronald McCain, is also a six-figure Reliv executive, while McCain's father, Donald, is a board member who sits on the company's compensation committee and chairs its audit committee. Altogether, Montgomery and kin control more than 22% of Reliv's stock. Until recently, investors have focused more on other details. Over the last three years, Reliv's net income has tripled to $7.5 million while sales have doubled to $113.6 million. Its share price has quadrupled over the same span. Reliv's pace has moderated in 2006, however, and in April CEO Montgomery and other insiders sold 800,000 shares. The stock, at an all-time high of $18.69 in January, now is under $11.

49

Quality Systems (QSII)

Everybody knows the healthcare industry is sick of paperwork. Quality Systems of Irvine, Calif. has built a nice little business automating the information needs of medical and dental group practices, community health centers, and dental schools. Quality's software keeps track of patient information, appointment scheduling, billing, insurance claims processing, and treatment outcome studies. In the past two years, Quality's net income has more than doubled, to $16 million on sales of $88 million. The company has been in the news lately though for reasons other than its strong growth. Director and large shareholder Ahmed Hussein launched a proxy contest last year, saying the company's board wasn't truly independent and had been handpicked by founder Sheldon Razin, who was asked to step down in 2000. Current CEO Louis Silverman has disputed the contention.

50

LoJack (LOJN)

LoJack Corp., the maker of stolen-vehicle tracking devices, has a charismatic brand that transcends its actual size. But in recent years, the Westwood (Mass.) company's financial performance has been impressive, too. A shift in strategy in 2001 pushed most of the installation work of the LoJack radio transmitters -- each a little bigger than a pack of cigarettes, and hidden somewhere in a car -- onto dealers and contractors. That gave dealers, who can make a few hundred bucks on each LoJack sold with a new car, an incentive to sell more of them. And it reduced costs for LoJack Corp. As a result, LoJack trackers are in about 6% of all cars sold, up from about 4% in 2001. Profits have risen an average annual 106% over the past 3 years, to $18.4 million in 2005, on $190.7 million in sales. Some analysts worry that as LoJack chases more sales volume and market share, it has reduced prices too much. But the company says it'll trade a reduced gross margin percentage for an increase in actual dollars and cents.