Cabela's Hot IPO

Get out the bubble machine and queue up the tango music. It's hot IPO time.

Cabela's (NYSE: CAB) is the nation's largest direct marketer and a leading specialty retailer for (drum roll, please) hunting, fishing, camping, and outdoor-related merchandise. Stop the tango music. Pass the insect repellant.

Cabela's IPO is no laughing matter. After setting a range of $15 to $17 a share, demand drove that range to $18 to $20 a share. And, after the company sold its 7.8 million shares at $20, the stock immediately soared more than 40% -- the largest percentage gain on any stock exchange today.

The Wall Street excitement is not reflected on the company's website. There is no IPO news, and then there is this: "Our founders have kept Cabela's a family-owned company, and they still play a very active role in the organization." Well, it's time to call the Web manager in from the woods and get the 43-year-old company's history updated.

The self-styled "World's Foremost Outfitter" was a $1.4 billion business in 2003 and posted net income of $51.4 million. Over the last five years, it has posted annual mid-double-digit growth in sales and earnings. That's a lot of duck calls, but the growth is in line with competitors Dick's Sporting Goods (NYSE: DKS), recent hot IPO Gander Mountain (Nasdaq: GMTN), and Dick's Sporting Goods' takeover target, Galyan's Trading (Nasdaq: GLYN).

The "outdoor lifestyle" market (is that politically correct or what?) has estimated annual sales of more than $30 billion. That kind of money draws competitors like big-box retailer The Sports Authority (NYSE: TSA) and everyday retailer Wal-Mart (NYSE: WMT). Operating margins are low -- and Wal-Mart has the best of the bunch.

Cabela's has jumped today because it's a quality company that was priced cheaply on a price-to-earnings basis. That gap has been hooked and reeled in. What remains to be seen is if the company's long-term success can continue compounding at double-digit rates.

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Fool contributor W.D. Crotty does not own any of the stocks mentioned.