Specialist optical components and systems manufacturer Gooch & Housego, which has an impressive recent earnings growth track record, is set for further growth.

Chief executive Gareth Jones recently buoyed investors with a 28% interim profits surge to £3.1m despite the impact of US dollar weakness, driven by excellent performances from NEOS Technologies and Gooch & Housego UK, businesses basking in the light of strong demand for acousto and precision optics. Further growth opportunities are being thrown up as lasers become ubiquitous, with new industrial, medical and defence applications for laser technology being adopted all the time and the range of products incorporating G&H components huge. Examples range from equipment used in surgery, to industrial lasers used to etch semi-conductor wafers to military applications.

Recent £5m acquisition SIFAM Fibre Optics looks a canny addition, broadening the business by bringing in optoelectronic products boasting good growth potential and supporting group initiatives in biomedical imaging and fibre lasers.

G&H continues its evolution from a collective of small companies into a purposeful global group guided by professional management. For the current year to September, house broker Oriel forecasts adjusted pre-tax profits of £5.8m to grow to £6.6m, from sales of £29.2m. By 2008, investors might expect normalised PBT to reach £8.1m on £37m turnover for a year in which earnings should burgeon 21% to 28.4p, giving an undemanding ’08 PEG ratio of 0.83 even after a strong 2007 share price performance. Dividend-paying G&H remains a highly attractive investment. Buy.