Ceramics specialist Ceradyne (NASDAQ:CRDN) continues to produce the kinds of astounding results that won it a place on the Foolish 8 list, featured in each monthly issue of Motley Fool Hidden Gems.

In 2003, the company grew its annual revenues 66%, increased its gross margin by a third, and racked up annual earnings growth of more than 300%. But that's not all.

Better sit down, because after reading that last line, you are not going to believe this one: Ceradyne's growth is accelerating.

In the fourth quarter, revenues did not grow 66% over Q4 2002. They grew 88%. And earnings did not grow 300%, but closer to 350%.

I am going to hate myself later for writing this -- but that kind of growth almost seems to justify the company's 22% share dilution over the past year. Especially, when you consider that the dilution was in large part due to a secondary stock offering Ceradyne conducted in July 2003.

Moreover, the company's growth does not appear to be slackening. Its order backlog at the end of 2003 tripled from its Dec. 31, 2002 level, and now stands at more than $100 million. Business is going so well that the company undertook the expansion of four separate facilities to keep up with product demand. Ceradyne's ceramic fare runs the gamut from orthodontic ceramic brackets to ceramic diesel engine parts to ceramic nose cones for missiles to ceramic crucibles for solar energy devices. Figured out what the company's signature product is yet?

And then there is the product driving much of Ceradyne's rise, with considerable media exposure to boot: ceramic plate armor for U.S. soldiers and their Humvees in Iraq.

With its growth and profitability and a market cap of just $400 million, one has to wonder how long Ceradyne will escape the gravitational pull from such slow-growth industrial giants as General Dynamics (NYSE:GD), United Technologies (NYSE:UTX), Lockheed Martin (NYSE:LMT), or Boeing (NYSE:BA).

Ceradyne's numbers and its premier name in the exploding business of keeping our soldiers safe from things that are, well, exploding, would make the company a logical addition to any of these defense-contracting behemoths.

Tom Gardner and his guest analysts comb through scores of financial reports looking for the next Hidden Gem stocks, companies that the average investor doesn't know about. Come see what the fuss is about!

F ool contributor Rich Smith owns no shares in any of the companies mentioned here.