Middleby's Piping Hot Quarter

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Middleby (Nasdaq: MIDD) is a good example of how a behind-the-scenes company can be one of the best investments around. As a case in point, Middleby -- which provides the equipment that heats up some of your favorite fast food -- reported a pretty darn impressive quarter.

Third-quarter net profit at Middleby increased 27% to $12.2 million, or $1.48 per share. Sales increased 28% to $103.2 million. The company cited recent acquisitions as contributing to that impressive increase in revenues. It also used operating cash flows to decrease its debt by 12%. (For the lowdown on the numbers, see the related Fool by Numbers.)

Most of us are well aware of restaurants we see on any nearby street, like McDonald's (NYSE: MCD) or Papa John's (Nasdaq: PZZA), but Middleby provides the food-service equipment -- namely, ovens -- that cook or heat up the goods for such companies. Its potential customer base is quite large; it serves not just restaurants, but also convenience stores, supermarkets, and institutional customers like hospitals, schools, stadiums, etc. It competes with companies like TurboChef (Nasdaq: OVEN), which makes ovens for the same customers.

Finding companies that operate behind the scenes can be good stuff for investors. Indeed, Middleby is a three-time selection for the small-cap-focused Motley Fool Hidden Gems service, and the most successful. Tom Gardner first recommended it in November 2003, and since then its stock has appreciated 430% (vs. 34% for the S&P). Meanwhile, it's got a strong and optimistic following in the Fool community -- it's a five-star stock in Motley Fool CAPS, with a whopping 741 outperform ratings (and only nine underperforms).

Middleby shares jumped 9% after the earnings release. It's no wonder that investors are seeing a great opportunity; Middleby is a well-managed company operating in a large and growing market. In fact, in his latest rerecommendation, Tom Gardner said that Selim Bassoul makes his short list of all-time favorite chief executives. Given the company's latest accomplishments, Middleby seems like a company that deserves rising optimism.

Hungry for more on Middleby? Check out the following Foolish articles:

• Dig in to the Fool by Numbers on Middleby.
• One Fool describes his experience with Middleby.
• Middleby was still delicious in March.

Middleby is a Motley Fool Hidden Gems recommendation. To find what other small-cap stocks have been recommended by the service, click here for a 30-day free trial.

Alyce Lomax does not own shares of any of the companies mentioned. She is currently ranked 2474 out of 12,400 in CAPS. The Fool has a disclosure policy.