Last August, when Fool co-founder Tom Gardner analyzed CD and DVD publishing system producer Rimage (NASDAQ:RIMG), he felt the $13.59 stock could be worth around $20 -- but wasn't quite up to par for his Hidden Gems newsletter.

That wasn't The Motley Fool's only favorable review. Back in October 2002, Matt Richey labeled the stock cheap at $8.95 a share.

Today the company recorded a new 52-week high of $18.30 a share on news fourth-quarter net income was up 26% (from last year's fourth quarter) to $.31 a share -- beating the company's previous forecast of $.20 to $.22 a share. What a concept: Higher stock prices with higher earnings.

Revenue, at $20.9 million, exceeded the company's forecast of $17.5 to $18.5 million. The company implemented a new growth strategy this year to pursue higher-growth opportunities in markets such as retail photography and medical imaging.

One stain on the company's fabric is insider sales -- a topic at the Fool's Rimage discussion board. There were nine sell transactions during the last six months and no purchases. Insiders own only 0.6% of the company, meaning it doesn't meet the Hidden Gems criteria of high insider ownership -- a way to ensure management's rewards are linked to those of the shareholders.

There is a lot to like about Rimage. It is debt-free and cash-rich (there is $5.26 a share in cash). The company expects next quarter's sales to increase from $14.4 million last year to $18.0 to $19.0 million. Net income is expected to grow from $1.8 million to the $2.1 million to $2.3 million range. Those are strong double-digit percentage gains.

The stock is trading for a reasonable 19.7 times trailing earnings. While that is not terribly undervalued, I'd argue the company's content strategy and recent distribution deal with Tech Data (NASDAQ:TECD) highlight the company is making the right moves to continue its strong growth.

The stock has risen 17.5% over the last 52 weeks -- more or less in line with the 18% increase in net income between 2004 and 2005. If things keep rolling as they have been, investors should look for a similar gain in the stock price in 2005.

While Tom Gardner did not make Rimage a Motley Fool Hidden Gems recommendation, he clearly saw promised that materialized. Care to see what he really likes? Try a free trial to the Motley Fool Hidden Gems newsletter.

Fool contributor W.D. Crotty cherishes his Hidden Gems newsletter subscription and does not own stock in Rimage or Tech Data. Clickhereto see the Motley Fool's disclosure policy.