The military and security applications of thermal imaging devices that allow users to see in the dark and poor weather are obvious. The potential enhancement of operations in such arenas as navigation safety, vehicle vision, environmental assessment, predictive maintenance and manufacturing control are becoming obvious. A leading provider of a range of application-specific instruments is headquartered in Wilsonville, Oregon.

FLIR Systems (NASDAQ: FLIR) designs and manufactures thermal imaging systems and infrared cameras, for a wide variety of thermography and imaging applications. The devices detect heat, allowing effective operation in darkness, fog and smoke. Clients use them in research and development, manufacturing process control, airborne observation, search and rescue, surveillance, reconnaissance and environmental monitoring. U.S. government agencies account for about one-third of FLIR's sales. Lockheed Martin (NYSE: LMT) is a major competitor.

FLIR pleased investors last week, when it reported Q3 EPS of 45 cents and revenues of $191.1 million. Analysts had been expecting 39 cents and $180.8 million. The firm set quarterly records for orders, backlog, and revenue. Management also guided FY07 EPS to $1.73-$1.78 ($1.69 consensus) and FY07 revenues to $755-$770 million ($749.31M consensus). The board declared a 2-for-1 split for December 10th. The share price popped on the news and then moved into 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 three "strong buys," three "buys," nine "holds" and a "sell." Analysts expect a 21% growth rate through the next year. The FLIR Sales Growth rate (43.47%), Operating Margin (25.47%), Net Profit Margin (17.97%), Return on Assets (15.53%) and Return on Investment (18.88%) 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 $29.62 and $72.70. A stop-loss of $60.75 looks good here.

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