Methode Electronics (NYSE: MEI) designs, manufactures and markets devices employing electrical, electronic, wireless, sensing and optical technologies. Its various components and subsystems are used by manufacturers of automobiles, computers, voice/data systems, aircraft, industrial equipment and medical devices. The firm also provides electrical, environmental and industrial testing services. Methode works through facilities in North America, Europe and Asia.

The company surprised Wall Street last week, when it reported fiscal Q2 EPS of 24 cents and revenues of $133.2 million. Analysts had been looking for 19 cents and $123.9 million. The CEO cited momentum gains in European and Asian sales for the favorable figures. Management also guided FY08 EPS to 80-87 cents (82 cent consensus) and FY08 revenues to $500-$515 million ($499.58M consensus). The MEI price popped through moving average resistance on the news and has since been defining a bullish "pennant" consolidation pattern. Stocks 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 issue with one "strong buy" and three "holds". Analysts see a 22 percent average annual growth rate, through the next five years. The stock's P/E ratio (16.41), PEG ratio (0.75), Price to Sales ratio (1.15), Price to Book ratio (1.63), Price to Cash Flow ratio (9.70), Price to Free Cash Flow ratio (11.02), Sales Growth rate (22.76%) and EPS Growth rate (84.62%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 95 percent of the outstanding shares. The stock is one of those used to calculate the S&P 600 SmallCap Index. Over the past 52 weeks, it has traded between $10.27 and $18.90. A stop-loss of $13.25 looks good here.

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