Our latest featured breakout stock makes special electronic systems, some of which are used for baggage scanning systems, notes Leo Fasciocco, editor of Ticker Tape Digest.

With annual revenues of $940 million, OSI Systems (OSIS) provides baggage screening, cargo and vehicle inspection, people screening, and radiation detection systems under the Rapiscan Systems name.

This segment also offers turnkey security screening solutions under the S2 name. The company's healthcare segment provides patient monitoring, diagnostic cardiology, anesthesia delivery, and ventilation systems, defibrillators, and medical devices.

Over the last year, the stock has risen 35% versus a 1% gain for the S&P 500 index (SPX). From a peak near $29 in 2007, the stock then fell back to $10 in 2008 in the bear market. Since then, it has surged higher.

The stock's latest push higher was triggered when OSIS received an order from France for explosive detection systems for airports. The push to a new high is very bullish.

Technically, the stock has shown a powerful breakout. The big volume, widening of the spread (range from high to low), and the play on security are bullish omens for the stock.

Analysts have been forecasting a modest 9% increase in OSIS's earnings for the fiscal year ending in June.

They are looking for $3.85 a share versus $3.53 a share. That estimate could get boosted if OSIS gets more contracts. The stock sells with a price-earnings ratio of 24.

Institutional sponsorship is very good. The largest fund holder is the 5-star rated Janus Triton D Fund (JANIX). It was a recent buyer of 47,576 shares. Also, the 5-star rated Janus Venture D Fund (JANVX) was a recent purchaser of 39,863 shares.

We caution that the stock is extended near-term. As such, we recommend scaling into positions and emphasize that this play is most suitable for aggressive investors.

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