BOSTON (TheStreet) -- National Presto Industries (NPK) has been transformed from an ugly duckling into a stock-market swan. The maker of small cooking appliances, a longtime "Under the Radar" favorite, is now being courted by individual and institutional investors.

TheStreet.com recommended National Presto on July 9 and again Dec. 9. It delivered 68% and 36% gains since those articles, besting the Russell 2000, a small-cap barometer. The investment criteria: a deceptively large yield (due to special annual dividends unaccounted for in stock screeners), impressive growth rates and a peer-relative discount.

Investors flooded into the appliance manufacturer this winter as the economy recovered. Despite the recession, Presto has increased revenue 22% annually, on average, since 2007 and boosted profit 36% a year. Sadly, the undiscovered appeal of the stock has dissipated. It recorded a 52-week high of $128.15 on March 9.

National Presto still boasts a pristine balance sheet, with $132 million of cash and no debt. Its third-quarter gross margin extended from 19% to 27% and its operating margin widened from 13% to 21%. The company just inked a five-year contract with the United States Army to supply 40-millimeter tactical and practice ammunition.

To boot, Chief Executive Officer Maryjo Cohen quoted Lord of the Rings author J.R.R. Tolkien in her fourth-quarter commentary. In reference to margin benefits stemming from reduced commodity costs, and indirectly a weak economy, she noted "it's an ill wind as blows nobody no good." For those in the know, Tolkien references are a critical bullish signal.

Presto's annual dividend is an anomalous reward. In January 2009, amid stock market chaos, the board paid out a special $4.55 on top of its regular $1 dividend, yielding to 10.5% of the stock price on payment date. Continuing its tradition of surprise payouts, it's distributing a $1 regular and a $7.15 special dividend to shareholders of record on March 4.

That translates to a 7% yield on the announcement date. Traders are now piling into the stock and the market value is approaching $1 billion, a threshold that will likely attract a few Johnny-come-lately sell-side analysts. It's wonderful to see the little toaster-maker-that-could from Eau Claire, Wisconsin, making it to the big-time.

Presto's new constituents are renters, not owners, like the old guard of July. As the stock is becoming a regular on the 52-week-high list, it might be time to sell some shares. At a price-to-book ratio of 2.8 and a price-to-cash-flow ratio of 17, valuation is getting rich. But a price-to-earnings-to-growth ratio of 0.4 reflects a hefty discount based on expected long-term growth.

-- Reported by Jake Lynch in Boston.

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