After reporting an incredible quarter before the bell, shares of Dawson Geophysical Co. (NASDAQ: DWSN) surged 23% during trading yesterday. For the quarter, Dawson earned 98 cents per share vs. analyst expectations of 76 cents per share. The company also handily beat revenue expectations. According to a statement by Dawson, the incredible results "reflect continued brisk domestic exploration activities by Dawson's clients, particularly those seeking natural gas."

This is no surprise -- Dawson beat expectations in four of the last five quarters. Like any company that consistently beats analyst expectations, shares of Dawson are up big in the last couple years. However, even at these levels I think the stock could make for an interesting momentum play.

Even after its surge in share price, the company's total market cap is only around $500 million without even considering the remarkably strong balance sheet. I expect Dawson to do about $290 million in sales next year -- slightly above the consensus estimate. On those sales, I expect an operating margin between 15 and 17%. This gives us an EBIT estimate of about $46.4 million. Assuming the company's cash balance remains roughly the same, this creates an "earnings yield" of about 9.2%. For a company growing at the ridiculous rates that Dawson is, I think this is a rather cheap price to pay.

Similarly, I think the technical perspective for the stock is very interesting:

As you can see, the stock's breakout today was very powerful on a price-basis. Not only did it breakout out of a rather strong resistance level (prior resistance, then tested support) but it also managed to breakout of the all-time high and hit a new 52-week high. All of this, mind you, was on extraordinary volume.

As you can see from my annotated chart, I think the logical spot for the stop on this position would be below one of the resistance levels the stock crossed today, at roughly $56 per share. I think a more realistic retraction would be in the $60 range and I always like to keep rather loose stops in positions like this due to the volatility inherent in momentum stocks.

As I also noted, the breakout today didn't immediately send the stochastics reading to oversold, a frequent occurrence with stocks that are breaking out in my experience.

As you can see from the weekly chart to the left, the stock's breakout this week has been very, very powerful on the volume-front. Although there's only been three days of trading so far this week, the stock is still at a volume high on the chart -- indicating that the amount of institutional buyers behind this stock is very significant.

In addition, the fact that the stock touched the 20 week moving average (~100 day) before "lifting off" is another bullish technical indication that the stock took an adequate breather before starting it's rally. This was the case when the stock broke out in the beginning of this year. Many chart readers, especially those who are believers in the Investors Business Daily system of trading/investing, strongly believe that pullbacks to the 20 week moving average are great buying times -- a doctrine that would've made you money in Dawson this week.

In conclusion, I think that the price tag on Dawson isn't very irrational like I see in many momentum stocks. However, the stock is a lot more than a modestly priced company -- it's growing at a ridiculous pace and I think the technical scenario is very interesting at this time.