Looking for the Next Home-Run Stocks

06/14/2007 12:00 am EST


James Oberweis

President, Oberweis Asset Management, Inc.

Jim Oberweis, president of Oberweis Asset Management and editor of the Oberweis Report, mentions three small- to mid-cap growth stocks he thinks will be big winners in the years ahead.

Accuray (NASDAQ: ARAY) has developed the first intelligent robotic radiosurgery system, called the CyberKnife system, which is intended to treat solid tumors anywhere in the body as an alternative to traditional surgery.

The CyberKnife system uses image-guidance technology to continuously track a tumor's location and transmit any position corrections to the robotic arm prior to delivery of each dose of radiation. A radiation treatment device uses microwaves to accelerate electrons to create high-energy X-ray beams to destroy the targeted tumor.

In the company's latest reported third quarter, sales increased approximately 129% from the third quarter of last year. Accuray Inc. reported operating income (excluding stock compensation expense) of $1.1 million in the latest reported third quarter, versus an operating loss of $5.5 million in the same quarter of last year. (ARAY's stock closed near $21.50 Wednesday-Editor.)

EDO (NYSE: EDO) designs and manufactures a diverse range of products used in critical defense applications. The company is a leading supplier of sophisticated, highly engineered products and systems for defense, aerospace and intelligence applications. Products include aircraft armament systems, composite structures and subsea warfare sonar systems.

EDO was recently awarded two contracts to provide the Department of Defense with an electronic system that counters radio-controlled improvised explosive devices (IEDs). In the company's latest reported first quarter, sales increased approximately 113% from the first quarter of last year. EDO Corporation reported earnings of 29 cents a share in the first quarter versus a loss of five cents a share in the same quarter of last year. (EDO closed near $34 Wednesday-Editor.)

LSB Industries (AMEX: LXU) manufactures and sells commercial and residential climate-control products and provides specialized engineering services. LSB is the market-share leader for both heat pumps and hydronic fan coils, well ahead of the number-two player, Trane, in both product lines.

LSB sells hydronic fan coils to major hotel chains, resorts, and large building owners, and has recently experienced significant demand for modular high-rise fan-coil products. Within the heat-pump business, LSB is benefiting from significant demand for geothermal units at both the residential and commercial level, with unit shipments increasing 22% sequentially in the most recent quarter. In the company's latest reported first quarter, sales increased approximately 32% [from] the first quarter of last year. LSB Industries reported earnings of 28 cents per share in the first quarter, [double what it earned] in the same quarter of last year.  (LSB's stock closed just below $21 Wednesday-Editor.)

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