While it isn’t necessarily safe to invest in this hot stock now, a serious pullback, in Flir Systems (FLIR) is definitely a place to look to add this fantastic electronics-military systems stock.

Growth in EPS and sales is what has proven to be behind the moves of the best stocks during their biggest run ups and the growth we have in FLIR is exactly what I want to see in any stock that I go long.

EPS growth the past seven quarters has been a fantastic 64%, 18%, 125%, 36%, 28%, 15%, and 33%. During those exact same quarters, sales have grown an even more impressive 18%, 19%, 38%, 33%, 43%, 31%, and 47%. You do not see this kind of growth in EPS and sales often and when you do see you want to be long that stock.

This EPS growth has given this stock an EPS growth rate of 28% along with a P/E of 41 which is near the highs of its range. That is why I suggest waiting for a pullback before entering this stock.

Not only are the current earnings fantastic, but estimates for 2008 and
2009 are for gains of 34% and 19%. These estimates have been raised recently and the chance for further increases in estimates is still out there.

Obviously when going long stocks you want the smart money moving with you.
That is what we have here as mutual fund ownership has increased from 159 to
176 to 189 to 201 funds the past four quarters. Mutual funds now own 50% of the shares outstanding. While that is a lot it is not nearly to the point of fund saturation.

A return on equity of 27% along with long-term debt to shareholder equity of 33% ensures that the long term is very good for this company, at current speed of operations.

There is no dividend in this stock but I could care less. A dividend is a sign of a company having lost the ability to grow its share price organically. That with a 9.3% of sales going to R&D will give this stock the leading edge going into the future.

In Investors Business Daily the stock has some incredibly amazing ratings with an EPS of 91, a group RS rating of 91, a stock RS rating of 97, an SMR rating of A, an accumulation/distribution rating of A, a composite rating of 99, a timeliness rating of A, but a sponsorship rating of C. This is about as consistently strong as you can get and any pullback to the 50 or 200 day moving average is a great place to make FLIR a part of your portfolio

AT THE TIME OF PUBLICATION, JOSHUA WAS LONG FLIR.

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