Finding a gem in the rough, polishing it, and putting it in your portfolio before the market recognizes its value can be a very rewarding experience. Just ask those who bought -- and held on to -- shares of America Online (now Time Warner (NYSE:TWX)) in 1994, (NASDAQ:AMZN) in 1997, or Starbucks (NASDAQ:SBUX) in 1998. (Come to think of it, some managed to find all three).

But what happens when the hidden gem is no longer hidden?

That, in a nutshell, is the story of Tom Gardner and his most successful find so far in Hidden Gems, Middleby (NASDAQ:MIDD). (You can read about how Tom found Middleby here.) The company now trades at a higher multiple than at the time of the original recommendation and has been the subject of a feature story in Investor's Business Daily, an article on faster pizza deliveries in the Chicago Sun-Times, and ranked number 12 on the Forbes list of the 200 Best Small Companies. Still a gem, but no longer hidden.

So forgive investors if they shrugged off Middleby's third-quarter results. It's not that earnings weren't good enough -- the company beat analyst estimates in both revenue and earnings per share -- it's just that everyone has come to expect such performance from the company already. Highlights from the announcement include gross margins that continue to expand (now up to 38% for the first nine months of 2004) and the continuing reductions in debt load (now down to $40.6 million). Excluding a tax benefit, earnings also rose to $0.72 per share, a 22% increase from the previous year.

In fairness, not everything was rosy. Margins would have been even higher if not for the rise in steel prices that knocked more than $1 million from Middleby's net income. However, as far as risks go, this one is not too bad as its only effect will likely be felt in the margins; revenue growth should remain unaffected.

With analyst projections for 2005 yearly EPS of anywhere from $3.10 to $3.28 per share, Middleby's forward P/E is 15-16. If earnings can continue to grow at 20% a clip, that's not a bad entry point at all, especially considering that you'll be part-owner of the leading manufacturer of commercial ovens for restaurant chains.

Since Tom Gardner recommended Middleby in the November 2003 issue of Motley Fool Hidden Gems , the shares have risen 170% versus the S&P 500's 12.83%. Want continuing coverage of Middleby and other small companies? Take a free trial of Hidden Gems today to learn more.

Fool contributor Marko Djuranovic owns shares of Middleby but of no other companies mentioned in this article.