Top Stocks for 2013: #4 FARO

FARO Technologies design, develop, and market portable, computerized measurement devices like measuring arms, laser scanner and laser tracker and software. FARO's products allow manufacturers to perform 3-D inspections of parts and assemblies on the shop floor.

FARO is in a high growth industry and seems fairly stable fundamentally with no long term debt and quick and current ratios above 4.5 and 5.5. It also has $8.50 in cash/share. The FPE of 22 and PEG of 1.25 indicate that his stock is fairly valued for its growth. However, with the inflated PE and PEG ratios the market has given other 3D printing plays, I expect to see this stock trade significantly higher from the current level of $35. The market cap is $600 million and I can see this being $1.5 billion within 2 years. 

My conservative price target for FARO at the end of 2013 is $45 a share, a 28.8% increase from current levels. Since the stock is still below 50 and 200 moving average I would not purchase at this time, as consolidation still needs to occur for a healthy break from the base with moving averages beneath. The 52 week low and double bottom is at $31.98 a share and where I would place my stop for this investment. I am a buyer in the $33-$35 range once the 50 day moving average flattens out, or I am a buyer on a break above the 50 day and a retest.