The stock's been hot lately, and the company didn't disappoint.

In its fiscal first quarter, LED maker Cree (NASDAQ:CREE) saw revenues climb 45% year over year to $95.9 million. While that figure was just short of the analyst estimate, the company saw net income almost triple to $24.4 million, or $0.32 per share -- beating the analyst earnings expectation of $0.28 per share.

LED sales continued to drive results, as LED product sales climbed 9% sequentially and 56% from last year's quarter to $78.9 million, accounting for 82% of sales. Boosting profitability, Cree managed to drive the average LED cost down 11% sequentially, while the average selling price declined only 1%. Helping that figure were accelerating sales of high-brightness LEDs, which accounted for 55% of LED revenue -- up from 54% last quarter and 45% just a year ago.

As a result, gross margins also clocked in at an impressive 56% -- a record high for the company and up from 43% in the same quarter last year. Meanwhile, Cree's net margin came in at 25%.

Looking ahead, Cree's second-quarter expectation for $98 million to $100 million is also just short of analyst estimates, while forecast earnings of $0.30 to $0.32 per share were once again ahead of the analyst $0.28-per-share estimate. CEO Chuck Swoboda noted that while the company has begun the conversion to fabrication of three-inch wafers for LED -- a key driver of further cost reductions -- the real benefits have yet to truly sink into the results.

Despite the better-than-expected earnings, Cree shares fell 4.7% to $27.01 in after-hours trading yesterday. This is probably at least partially due to the less-than-blowout revenue figures, but is more a factor of the fantastic run the stock has had. Three months ago, the stock could be had for about $20 a share; earlier this month, it was trading in the low $30s.

Still, Cree is fulfilling its promise as the Rule Breaker selection in the premier issue of The Motley Fool Select (now Motley Fool Hidden Gems) in April 2001 -- the write-up that first turned me on to Cree. It didn't hurt that I associated Rule Breakers with successful hyper-growth companies such as Amazon.com (NASDAQ:AMZN) and eBay (NASDAQ:EBAY).

So far, Cree has capitalized mostly on the widespread adoption of LEDs in cell phones from companies such as Nokia (NYSE:NOK) and Motorola (NYSE:MOT). Cree looks to further benefit as LEDs become more cost-effective and practical for increased use in such things as automotive applications and everyday lighting. In addition, there is the intriguing profit potential in other ventures capitalizing on Cree's core competitive advantage in the production of silicon carbide.

All said, if you're fretting at not selling the stock at $33, don't. At this point, if you're in it for the long haul, I don't think there is any real exit strategy that could have pointed to a sale. Unless the stock becomes absurdly priced, any sell decision regarding Cree should be more closely aligned with the progress and success of the company's business initiatives rather than any minor short-term price bubble. Meanwhile, the stock doesn't look particularly expensive at less than 21 times trailing free cash flow, anyway.

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Fool contributor Jeff Hwang owns shares of Cree and eBay.