The company surprised the Street earlier in the week, when it raised its Q3 EPS guidance to 20-21 cents and its revenue guidance to $38-$40 million. Analysts had been looking for 12 cents and $36.65 million. Management cited stronger than expected quarterly growth and contributions from acquisitions. XFML shares popped on the news and then moved into the initial stage of a bullish "pennant" consolidation pattern. Prices frequently exit pennants moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Brokers recommend the shares with two "buys". Analysts anticipate a 43% average annual growth rate, through the next five years. The XFML P/E ratio (21.95), PEG ratio (0.51), Price to Book ratio (1.28) and Sales Growth rate (222.22%) compare favorably with industry, sector and S&P 500 averages. Institutions own about 24% of the outstanding shares. Since going public in March, the stock has traded between $5.06 and $13.00. A stop-loss of $6.90 looks good here. Note that the firm is expected to report Q3 results on November 13th.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.