Zagg's Rocket Ride May Be Just Beginning

Zagg is slated to report its third-quarter results on Nov. 10, and it said it plans to provide more color on its outlook for the full year at that time. Wall Street's current consensus estimate is for a profit of 11 cents a share, but that number is sure to move higher given the new revenue view. MDB Capital lifted its projection to earnings of 13 cents a share following the news.

Even with this run-up, the stock looks affordable with its forward price-to-earnings multiple based on a consensus estimate for profit of 38 cents a share in fiscal 2011 at around 22X.

And judging by just how bullish the outlook is and the overall positive trend for smartphones and tablets, Zagg looks like a good bet to continue to flourish. MDB Capital said in its note that gross margins would likely take a bit of a hit from greater presence of retail in the sales mix, but that seems to be a fair trade-off given the amount of topline growth the company now sees.

--Written by Michael Baron in New York.

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