Last week, I profiled a widely ignored growth stock, Sherwin-Williams (NYSE: SHW). I thought investors should be aware of the stock because it has been crushing the market, more than tripling during the past five years — yet it hasn’t gotten much attention.

Well, I’ve got another overlooked growth stock investors should consider. It’s up almost 170% during the past five years and, like SHW, is set for more impressive gains in the future.

But most investors have probably never heard of this stock. The company is tiny, with a market capitalization of only $101 million. It’s not in a very high-profile business, either, currently generating revenue of about $67 million a year selling transaction-based printers to the gambling, banking, food service, and oil and gas industries. 

#-ad_banner-#A huge plus for this company is it often faces very little competition. For instance, it’s just one of two firms of its kind that sell to manufacturers of slot machines and other electronic casino games. The company also has an exclusive contract to provide printers to GTECH, the world’s largest provider of lottery ticket terminals.

I’m referring to TransAct Technologies (Nasdaq: TACT). If things go as well for the company as I think they could in the next five years, its stock may almost triple again during that time.

TransAct has a crop of newer products that make this prediction feasible, and a prime example is the Ithaca 9700 food safety terminal. The device came out in October 2012 and was designed for McDonald’s (NYSE: MCD), but it can be customized for any food service setting.

The Ithaca 9700 facilitates food safety by helping restaurant staff keep track of expiration dates for perishables and packaged ingredients that have has opened for use and returned to shelves, refrigerators or freezers. Because it can be programmed to fit each situation based on the types of ingredients a restaurant typically uses, the terminal enables staff to quickly print legible and accurate “use by” labels. This is preferable to more time-consuming and less accurate food tracking methods like sloppy handwritten stickers or cumbersome handheld label-printing devices that have to be programmed with each use.

	© 2014 Transact Technologies
	The Ithaca 9700 facilitates food safety by helping restaurant staff keep track of expiration dates for perishables and packaged ingredients that have has opened for use and returned to shelves, refrigerators or freezers.

Management estimates potential sales of around 700,000 Ithaca 9700 terminals worldwide at an average cost of $1,000 apiece to fast-food chains and other restaurants. 

TransAct is a key provider to the gambling industry, too. Its printers help make casinos more efficient and profitable by eliminating the need for tokens or coins and replacing them with tickets, which are much easier to use. The printers are installed in about 500,000 gambling machines in nearly 1,800 casinos, giving TransAct about half the printed casino ticket market. 

In 2010, TransAct introduced its Epicentral software, which enables casinos to transmit printed coupons and other promotions directly to slot machines and other electronic gambling machines as customers are playing. Such freebies encourage more gambling by providing customers with something that helps offset their gambling losses but is relatively inexpensive for the casino.

Epicentral has begun to gain traction and is now in use in at least 5,000 gambling machines at four casinos. Based on this early experience, the software appears to double the “average daily theoretical” (or ADT, a measure of a casino’s earnings per dollar played) among lower-tier gamblers. In other words, gamers who get a coupon from Epicentral become willing to lose twice as much money as they ordinarily would. So someone who’d usually quit after dropping $50 on the slots might end up blowing $100 after getting a coupon for $20 of free play.

Among TransAct’s other key products are printers for banks and other financial institutions to validate and print receipts at teller stations. The company also makes high-quality color printers for the oil and gas industry, like the Printrex 980, which displays detailed records and images of geologic formations obtained from exploratory boreholes.

TransAct’s earnings per share (EPS) have climbed an impressive 23% annually for the past five years. I expect continued growth of at least 20% annually for the next five years based on the promising new product lineup and relatively high degree of diversification between industries for such a small company.

At that projected growth rate, EPS could jump from $0.66 currently to $1.64 in early 2019. This implies stock growth potential to around $34 a share from the current per-share price of about $12.30, assuming the price-to-earnings (P/E) ratio remains at the historical level of 21. In this case, investors would be looking at more than a 170% gain.

Risks to Consider: As a micro-cap stock, TACT belongs to one of the riskiest asset classes. Plus, there’s always a risk of increased competition, and many customers are in highly cyclical industries like energy and gambling.

Action to Take –> I highly recommend keeping an eye on TransAct. Despite nearly tripling during the past five years, TACT remains a good value, as indicated by a P/E just shy of 19. That’s actually a tad lower than the S&P 500’s average earnings multiple. If you’re interested in owning TACT, now looks an excellent time to buy.

P.S. In our latest research, we’ve uncovered several more investments that, much like TransAct, thoroughly dominate their industries. To learn more about these ideas, including several names and ticker symbols, click here now.