Economy's Nuts and Bolts: Under the Radar

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FAIRVIEW, Pa. (TheStreet) -- TheStreet recommended Spectrum Control (SPEC) , a maker of voltage suppressors, power distributors and other electrical components, as an Under the Radar pick Feb. 4.

Since then, the Fairview, Pa.-based company's stock has jumped 34%, boosted by strong quarterly earnings. Even though it takes a master's degree in engineering to understand Spectrum's offerings, the company still looks promising.

Spectrum is the type of company that will benefit early from a ramp-up in inventories, since its products are the nuts and bolts of bigger items rather than the finished product. You can't find its products at

Wal-Mart

(WMT) - Get Report

-- they can be found in medical, military, industrial and aerospace applications.

The company's stock has almost doubled over the past year, yet it remains cheap based on a price-to-equity (P/E) valuation. At 14, Spectrum's P/E is less than the industry average of 22.8. Free cash flow of $14.4 million over the past 12 months has left the company in a strong position financially.

Spectrum has maintained good liquidity, with a current ratio of 4.5, more than the benchmark of 1. The solid financials extend deeper into the balance sheet as well. The company's tiny debt-to-equity ratio of 0.22 is extremely conservative, almost to a fault. The company could probably stand to lift its leverage to help boost profits.

Spectrum is rated "buy" from

TheStreet.com Ratings

. Nuts-and-bolts companies such as this one should see profit increase substantially as customers boost inventories. Spectrum also provides a stable bet due to its spotless financials. The gain over the past two months has brought the stock closer inline to being fairly valued, but it still has room to run.

-- Reported by David MacDougall in Boston.

Prior to joining TheStreet Ratings, David MacDougall was an analyst at Cambridge Associates, an investment consulting firm, where he worked with private equity and venture capital funds. He graduated cum laude from Northeastern University with a bachelor's degree in finance and is a Level III CFA candidate.