Last month, the Vermont Teddy Bear Co. (NASDAQ:BEAR) was busy gearing up for an expected blitz of holiday orders. In fact, it was anticipating its busiest season ever and had just doubled the size of its distribution facility to help ensure that order fulfillment didn't fall behind. Apparently, the expansion was completed not a moment too soon; the company announced today that December orders soared 29% to 105,000, from 81,000 booked a year ago.

Each of the company's four business segments reported solid sales growth, ranging from a modest 4% rise in orders for fresh flowers and plants at the newly acquired Calyx and Corolla to a 147% surge in demand for PajamaGrams. The pajama division -- through which customers can send attractively packaged gifts of sleepwear and spa products -- has grown quickly from just a simple concept that was introduced a few years ago and this month has outstripped the namesake teddy bear segment.

The good news has catapulted the small company into the ranks of the Nasdaq's top daily gainers -- territory usually claimed by the likes of Taser (NASDAQ:TASR) or IPIX (NASDAQ:IPIX). At one point today, shares of the thinly traded company (with average daily volume of only 3,700 shares) had risen by more than 40% to close in on the 52-week high of $6.69, though they have since lost some of that ground.

Though Vermont Teddy Bear does have a bricks-and-mortar retail presence that incorporates a fun, interactive tour where visitors can build their own customized bear (I still have mine, somewhere), it owes much of its success to flourishing e-commerce. Online sales have grown from a meager $1.7 million (10% of total revenues) in 1997 to $28 million, or roughly half of this year's revenues. The company did not reveal any online holiday sales statistics, but judging by bellwether Amazon.com's (NASDAQ:AMZN) record-setting results, the virtual cash registers likely were busy.

Vermont Teddy Bear has carved out an impressive niche, using direct marketing for an assortment of fine gifts that are sure to be a hit on Mother's Day or Valentine's Day (still the company's two biggest holidays). It has also made inroads with female gift buyers, whereas previously most of the marketing efforts were targeted to men.

Even after today's big run-up (in the span of time it took to write the last two paragraphs, the shares have jumped by another dollar and are now trading 50% higher), the company still trades at a discount to richly valued rival Build-A-Bear Workshops (NYSE:BBW). Vermont Teddy Bear is not cheap, but the company's robust growth rates make it a little easier to be bullish on this bear.

Fool contributor Nathan Slaughter can't bear to throw away any of his tattered old stuffed animals. He owns none of the companies mentioned.