Analogic Corporation (NASDAQ: ALOG) designs and manufactures medical and security imaging processing systems, primarily for original equipment manufacturers. Its devices are used in such products as magnetic resonance imagers, ultrasound transducers, checked luggage scanners and explosives detection systems. Major customers include L-3 Communications (NYSE: LLL), Philips (NYSE: PHG) and General Electric (NYSE: GE).

The company pleased investors last week, when it reported fiscal Q2 EPS of 54 cents and revenues of $99.4 million. Analysts had been looking for 53 cents and $95.9 million. Management also agreed to buy MRI parts maker Copley Controls for $68.8 million. Analogic said the acquisition would expand product offerings and add business from Asia. This year alone, the move was expected to gain over $85 million in revenue. Needham subsequently upgraded the shares from "hold" to "buy".

ALOG shares popped through 30-day, 50-day and 90-day moving average resistance on the news and then moved into 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 issue with one "strong buy", one "buy" and two "holds". Analysts expect a 29% growth rate, through the next year. The ALOG Price to Sales ratio (2.33), Price to Book ratio (2.08) and EPS Growth rate (38.46%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 95% 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 $50.00 and $79.02. A stop-loss of $55.90 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.