I said it yesterday, I'll say it again today. In the short term, Mr. Market is nuts. Shares in Motley Fool Hidden Gems pick FARO Technologies (NASDAQ:FARO) plunged nearly 10% this morning after the maker of next-generation measuring devices and software reported -- prepare to be frightened -- record earnings and strong growth potential.

Fourth-quarter sales were up 52% to $23 million. Net income was up 81%, which fueled per-share earnings growth of 69%. (A private placement of stock this year increased the share count.) For the full year, sales shot up 55.4% to $71.8 million, and earnings came in at $0.57 per share, excluding a $0.07-per-share bonus from a litigation settlement.

For 2004, management issued guidance of a 20%-25% increase in sales, with a 25%-50% increase in net profit. Those numbers may be responsible for today's fire sale. Dumping shares on that account is a foolish (very little F) thing to do. First of all, management has said the historically weak first quarter may already present a nearly 50% gain over last year's. Moreover, FARO has a habit of exceeding guidance by hefty margins -- just look at the 26% surprise for Q4.

The company continues to increase its profitability: Margins increased across the board, and cash flow from operations was $4.7 million. Finally, the firm is extending its lead in the rapidly expanding market for manufacturing measurement systems. Its biggest U.S. competitor didn't even bother to show up at the recent Society of Automotive Engineers Congress, a smorgasbord of technology frequented by engineers from the companies like Ford (NYSE:F), General Motors (NYSE:GM), Toyota (NYSE:TM), Honda (NYSE:HMC), DaimlerChrysler (NYSE:DCX), and scores of other companies.

FARO looks to double its sales in Asia for the coming year, and it is ramping up a new team to expand sales in China. Expandable manufacturing capacity in the U.S. and Switzerland is ready to absorb any unforeseen acceleration in demand. In short, FARO is managing the present while preparing for the much discussed (and hoped-for) "hockey stick" inflection point of the future, when its computer-aided measuring and manufacturing systems become the rule in industry, rather than the exception.

In the past few months, FARO's stock has been about as stable as a two-legged table. Investors with a long-term view would do well to chew a couple of antacids and take advantage of the periodic fire sales.

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If Fool contributor Seth Jayson weren't bound by a strict disclosure policy, he would be shoveling more shares of FARO onto his existing stockpile. He owns shares of FARO. View his Fool profile here.