OKLAHOMA CITY -- Investors might want to pay a little more attention to Ceradyne's newest secret weapon.

Rather than dwelling on weak spots in Ceradyne's recent quarterly update, including a sharp decline in booked orders and a conservative outlook for 2007 earnings, they could shift their focus to a possible remedy for such disappointments.

Specifically, they could take a closer look at the Bull -- Ceradyne's answer to military calls for sturdier mine-resistant ambush-protected vehicles. This story is the second installment in TheStreet.com's five-part series examining the top players in the multibillion-dollar MRAP bidding.

With its unique ability to withstand hits from "explosively formed penetrators," the Bull could soon establish Ceradyne as a prominent player -- alongside leading MRAP vehicle suppliers BAE Systems ( BAESY), Force Protection ( FRPT - Get Report) and Navistar
-- in the multibillion-dollar MRAP II program. Ceradyne's new partnership with Oshkosh ( OSK - Get Report), a big commercial truck maker still chasing MRAP success, could help the company's chances even more.

"Although we do not currently have orders for the Bull, we believe there is substantial congressional and military interest in this unique vehicle," Ceradyne stated during last month's quarterly conference call. Indeed, "we anticipate -- very, very shortly -- for something to happen."

Actually, Ceradyne looks poised to field orders for a stripped-down version of the Bull before MRAP II officially gets started. Notably, the company revealed last month, Sen. Joe Biden (D., Del.) -- chairman of the foreign relations committee and an outspoken fan of the MRAP program -- has called for 200 EFP-resistant vehicles immediately.

If funding for those vehicles comes through, the company indicated, Ceradyne will be the lone beneficiary. That order, by itself, could generate $200 million in revenue -- more than Ceradyne reported for all of its products combined in the latest quarter -- before MRAP II even takes off next year.

Then, under MRAP II, Ceradyne foresees the government requesting at least 2,000 vehicles with EFP protection. So far, Ceradyne claims, only the Bull has been evaluated for EFP survivability -- with outstanding results -- at the military's official test site in Aberdeen, Md. Thus, the company feels well positioned to meet escalating MRAP demands.

"If you look at the total requirement, it is not inconceivable to expect that some of the previous requirement for MRAP -- the original requirement -- would shift into MRAP II because of the increased level of protection that would be achieved," Ceradyne CEO Joel Moskowitz told investors last month. "You would have all of the level of protection for the original MRAP, plus the additional protection that's being requested for MRAP II.

"So the department would eventually say, 'OK, this is the level of protection that I need for all of the vehicles coming forward -- and the numbers would greatly exceed 2,000."

All told, the military has laid out plans to order roughly 20,000 vehicles under MRAP II. If the military calls for EFP protection in most of those vehicles, rather than just a fraction of them, Ceradyne could enjoy even stronger demand for the Bull than it currently anticipates.

Of course, Ceradyne fully expects some competition going forward.

"You have to consider that the other manufacturers of MRAP are very, very busy trying to meet MRAP II requirements themselves," Moskowitz admitted. So "we just have to wait and see who emerges with another solution that would be tested and acceptable by the Department of Defense."

Force Protection, a big winner in the original MRAP program, has reportedly claimed that its new Cheetah has passed EFP tests at Aberdeen as well. Meanwhile, closely held Protected Vehicles -- a company started by Force Protection's founder -- last month began touting the success of its new ShieldAll armor for protection against EFPs.

Moreover, Protected Vehicles says that ShieldAll can be used on its own vehicles and competing vehicles alike. The company says ShieldAll boasts a unique strength that will differentiate it from the pack.

"This armor solution is one-third lighter than steel armor, yet provides EFP protection which standard steel armor does not," the company stated in a recent press release. "This makes PVI's EFP solution lighter than all known solutions to date."

Even so, Ceradyne seems to feel that it enjoys a definite advantage right now.

"To the best of my knowledge, at this point, there are lots of claims being made, but no other test data has been produced," Marc King, Ceradyne's vice president of armor programs, stressed last month. "Our claims are based on test data which is on file.

"What I can tell you is the armor was never defeated," King added. "That is a very unusual set of circumstances for this type of a solution -- and that, in fact, is what has driven this increased interest in the thing called MRAP II."

Still, Ceradyne has yet to prove itself with official orders that will place its vehicles in the field. Thus, some experts still favor established MRAP players such as Force Protection despite that company's dismal stock performance in recent months.

Meanwhile, many analysts are still trying to quantify Ceradyne's potential and waiting to recommend the company's stock -- which has nearly doubled since last fall -- until they have more information to do so. Wachovia analyst Gary Liebowitz is among that crowd.

"We caution that our armor estimates for 2008 are rather speculative and, depending on how the uncertainties described above (including MRAP) play out, could end up being 20% to 30% above or below our estimate," Liebowitz wrote after Ceradyne's second-quarter update. "We also note that the sales and profitability of the new industrial businesses are also hard to forecast."

Liebowitz currently values Ceradyne's stock, up 71 cents to $69.50 Wednessday, at $78 to $83 a share. His firm makes a market in Ceradyne's securities and hopes to secure investment banking business from the company going forward.

"Given the uncertainties," he concluded, "we continue to favor shares of those contractors with greater revenue/EPS (earnings-per-share) visibility and comparable or more attractive valuations."