This article is part of Our Top 5 Tech Stocks for 2011 series.

I want to say one word to you. Just one word. Are you listening? Lasers.

OK, so it's not as dramatic as hearing "plastics" uttered to Dustin Hoffman in The Graduate, or maybe not even as alluring for tech investors today as hearing buzzwords like "cloud computing" or "smartphones." But big changes have been taking place over the last several years in the seemingly boring world of industrial lasers. And those changes have turned one laser manufacturer in particular, IPG Photonics (Nasdaq: IPGP), into a growth story as compelling as anything found in the more hyped-up corners of the tech universe.

Fibers lasers take off
Why has IPG Photonics become the laser industry's version of a tech high-flyer? It has everything to do with the company's dominant position in the market for fiber lasers. Compared with the gas and solid-state lasers that have historically dominated the industrial laser business, fiber lasers are generally more precise and energy-efficient, have lower maintenance costs, and take up less space. Until recently, these benefits were offset by the much higher cost of manufacturing fiber lasers, and for some applications, their limited power range. But costs have been falling in a hurry, and all the while fiber laser manufacturers have been pushing the envelope in terms of how much energy their products can put out.

The result? The market share of fiber lasers within the industrial laser business has been skyrocketing, thanks to manufacturers around the world choosing them over traditional lasers for tasks such as cutting, welding, drilling, and engraving. The medical and scientific markets have also begun adopting fiber lasers. And to top it all off, the unique properties of fiber lasers are allowing them to displace non-laser technologies such as gas and plasma for some manufacturing tasks, while opening up brand-new applications in the military and elsewhere.

But in spite of all this heady growth, there's still plenty of market share left for fiber lasers to gain. Their penetration rate within the overall laser market is estimated to be less than 15% (albeit growing rapidly), and industry research firm Optech Consulting is forecasting 20% annual revenue growth through 2015. Though considering the kind of breakneck growth that fiber lasers have been seeing as of late, 20% might be on the conservative side.

Why IPG rules the roost
The soaring penetration rate of fiber lasers sure hasn't gone unnoticed by the laser industry's traditional bigwigs, such as Rofin-Sinar Technologies (Nasdaq: RSTI), Coherent (Nasdaq: COHR), and Newport (Nasdaq: NEWP) who have been rushing to expand their product lines for the segment. But all of this new competition hasn't done anything to knock IPG Photonics off its perch as the fiber laser market's unquestioned colossus. With an estimated share of around 65%, and a product line that spans from the low end of the market (less than 100 watts of power) to the high-end (a kilowatt or higher), IPG's fiber lasers are used by everyone from Gillette to Boeing to BMW to Toshiba. And with over 75% of the company's revenues coming from outside of North America, there's little question about its ability to compete with larger firms for big-name international clients.

Adding a little more spice to IPG's story is the fact that the company is competing in one high-profile part of the tech sector: IPG is leveraging its fiber laser expertise to push into the market for optical communications subsystems such as amplifiers and transmission modules, and thereby compete with the likes of JDS Uniphase (Nasdaq: JDSU), Emkore (Nasdaq: EMKR), and Oclaro (Nasdaq: OCLR). While communications products still aren't a big percentage of IPG's total sales, it's a business that has been taking off as of late, with 160% annual revenue growth reported last quarter.

IPG owes its top-dog status in fiber lasers to a combination of technological know-how and unrivaled manufacturing skill. The company's specialty optical fibers, propietary laser pumps, and other home-grown components help give it a leg up on the competition. As does IPG's vertical manufacturing strategy: by producing nearly all of the key components for its lasers in-house, as well as a lot of the related manufacturing equipment and accessories, IPG is able to create some real barriers to entry for any challenger to its throne -- not to mention pad its margins and cut down on the time needed to roll out new products.

At roughly 23 times its estimated 2011 earnings, IPG's shares might not look like much of a bargain. But forward estimates have been moving up quickly as the company has delivered one blowout quarter after another, and I don't think they're done climbing. The 21% revenue growth that the consensus estimate is based on looks conservative me -- both considering the 74% revenue growth that the company reported in its most recent quarter, and the steadily improving outlook for global manufacturing and capital investments. In addition, even as IPG's profit margins have been taking off as the company reaps the benefits of lower component costs and greater economies of scale, the company has remained very restrained with regards to its forward margin guidance. That makes for another reason why analyst estimates might still be too low.

Factor in the enormous long-term potential of the fiber laser market, and there are a lot of reasons to think that IPG's shares still have plenty of room to run. As a laser manufacturer, IPG will never have the cachet of an Apple or a Netflix. But that's no reason why its stock can't perform like some other, more famous high-flyers in the tech universe.

Fool contributor Eric Jhonsa has no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.