Last week I flagged companies such as Overstock (NASDAQ:OSTK), Blue Nile (NASDAQ:NILE), Red Envelope (NASDAQ:REDE), and Electronics Boutique (NASDAQ:ELBO) as those whose strongest sales come during the winter months, particularly around the holiday shopping season. Some stocks flourish when it's frigid; others get frostbite. One such company, Trex (NYSE:TWP), sees its best days when it's warm and sunny.

Trex manufactures a non-wood decking and railing called, you guessed it, Trex. This unique wood supplement can be used anywhere from your local dock to your outdoor patio. Trex has the appearance and workability of wood, but while wood requires sealants and maintenance to extend its life, Trex requires no attention. These attractive features are fueling sales.

Americans need a place to set up a cooler full of Anheuser-Busch's Budweiser (NYSE:BUD) and grill their brats (hot dogs, not kids), so with time old wood decks will need replacing, and of course new homes will need decks. With a large market that remains untapped, is it time to saddle up to Trex and rein in some shares?

In its third-quarter results we find some mouthwatering numbers. Quarterly net sales of $64.4 million were 56% above those of the same period a year ago. Likewise, its earnings of $7.1 million were up 39% year over year. Trex also sports a healthy balance sheet with cash and equivalents of $61.9 million and debt of $54 million. Additionally, the company has forecast sales and earnings growth for 2005 of 20% to 25%.

The company growth guidance will help in determining whether this is a good time to buy. Since Trex's weakest period is the fourth quarter, establishing a run rate of structural free cash flow (SFCF) will do little good. A more accurate picture of its owner earnings (SFCF) is obtained by using a trailing 12-month (TTM) figure. We find the company has TTM SFCF of $22.4 million. With its enterprise value of $672.7 million, the company is trading at 30 times its TTM SFCF.

Using a 25% growth rate Trex appears to be fully valued. However, given the infancy of its relationship with the King Kong of hardware retailers, Home Depot (NYSE:HD), and with the hundreds of thousands of new homes built in the last few years, this growth rate may be severely understated, leaving plenty of room for this stock to run. At the least, a prospective investor will do well to keep this company on a closely monitored watch list.

Tom Gardner recommended Trex for Motley Fool Stock Advisor subscribers in the November 2003 issue. Since Tom highlighted the company, its shares have risen 44% versus the S&P 500's 14% gain. Subscribe today risk-free for six months to learn which other stocks have made the cut.

Fool contributor Jeremy MacNealy does not own shares in any of the companies mentioned.