For some investors, the best companies are the ones that succeed while “flying under the radar.”

#-ad_banner-#That is, they generate attractive profits away from the limelight without the constant scrutiny of highly publicized firms like Apple (Nasdaq: AAPL), Facebook (Nasdaq: FB), Green Mountain Coffee Roasters (Nasdaq: GMCR), and others.

While ‘famous’ companies such as these can make big money for shareholders, owning their stocks can be extra stressful. They’re often in the news and everybody has a different opinion about them. It’s enough to get any investor second-guessing the decision to invest in them.

I wouldn’t shun these stocks completely, but it certainly isn’t necessary to have a portfolio full of them. There are plenty of under-the-radar stocks doing just as well or better without all the hype.

One great example is a fast-growing airline stock you may never even have heard of if you don’t live on the West Coast. The stock’s up 65% in the past 12 months and 155% in the past three years. If you compare the financial performance of this nimble, regionally focused mid-cap to the industry averages, it’s well ahead in virtually every key growth and profitability measure.

What’s more, it carries only a fifth the debt of the typical competitor — a huge distinction in an industry famous for excessive leverage. And despite fast growth, the company’s shares are still quite cheap, trading for only around 11 times earnings compared with the industry average price-to-earnings (P/E) ratio of 22.

I’m referring to Seattle-based Alaska Air Group (NYSE: ALK), which has a market cap of $5.6 billion and provides service mainly to Alaska, the West Coast and Hawaii.

During the strong air travel industry rebound of the past five years, ALK has done especially well in part just because it’s smaller. For most companies, including airlines, it’s often easier to grow and profit regionally than globally since the latter is usually more complicated and costly.

That said, there’s plenty about ALK that makes it a special company regardless of size, like industry-leading customer service. Last year marked the sixth straight year ALK was named the top network carrier in the annual North American Airline Satisfaction Study, beating out main rivals like Delta Air Lines (NYSE: DAL), American Airlines (Nasdaq: AAL), and Air Canada.

And while horrible financial statements are often a fact of life for airlines, that isn’t the case for ALK. Besides achieving well-above-average margins, sales and net income growth, and returns on assets and equity, the company has progressively reduced costs. Indeed, sales, general, and administrative (SG&A) expenses have fallen from 47% of revenue in 2009 to 38% currently.

	Wikipedia/Frank Kovalchek
	During the strong air travel industry rebound of the past five years, Alaska Air has done especially well in part just because it’s smaller.

ALK has also been especially good at limiting its cost per available seat mile (CASM), a metric commonly used to assess an airline’s cost-efficiency. CASM is calculated by dividing operating costs by available seat miles, which is in turn a basic production measure determined by multiplying the number of seats available by the total distance flown. Last year, ALK reported an increase in CASM of just 1%, compared with 1.3% for Delta, 1.5% for Southwest Airlines (NYSE: LUV), and 2.4% for JetBlue Airways (Nasdaq: JBLU).

These sorts of things have certainly helped ALK’s cash story. Last year was the company’s fourth straight year of positive free cash flow, which ranged from $235 million to $415 million from 2010 through 2013. Total cash — defined as cash and equivalents and short-term investments — is at a decade high of more than $1.3 billion.

Strength in the cash department has enabled ALK to reward shareholders through buybacks and dividends. The latest buyback, a plan announced in September 2012 to repurchase $250 million common shares, is the company’s largest ever. It should be completed by the end of the year. The annual dividend of $1 a share and 1.2% yield may seem pedestrian — but not when you consider most airline stocks have no dividend.

I also expect ALK to reward shareholders with a lot more growth, and the company certainly has plans to achieve this. A key strategy is to expand further in Hawaii, where the company first began providing service in 2007. Since then, Hawaiian routes have grown to about a fifth of ALK’s total capacity, making Hawaii the company’s second-largest area of operation (the West Coast is the largest, accounting for more than a third of total capacity).

According to management, the best expansion method in Hawaii is to increase flights from secondary West Coast cities to Hawaii’s neighboring islands. Trying to get more business in the inter-island market isn’t the way to go since that market is well-saturated, management asserts.

Barring a nasty price war, which doesn’t seem likely at this point, ALK is capable of meeting consensus estimates for earnings per share (EPS) to climb 12.5% to 15% a year. This would put EPS anywhere from $12.90 to $14.40 by 2019, compared with $7.16 currently.

Based on a projected P/E of 13, such results could push the stock into the $168- to $187-a-share range. From the current price of about $81.50, you’d be looking at a potential gain of 106% to 130% during the coming five years.

Risks to Consider: The biggest challenge facing ALK right now is competition. Delta, JetBlue, and other rivals have been adding routes in ALK’s main territories. The onus is on ALK to stay on top of its game or risk losing market share.

Action to Take –> Keep the issue of increased competition in perspective. Alaska Air has been in business for decades. They know what to do. And they’re doing it — moving ahead with growth plans, focusing on customer service, reining in costs, and selectively moving into competitors’ territories. I’m confident this top-notch yet lesser-known airline will keep growing quickly and performing at a high level while handsomely rewarding shareholders along the way.

P.S. Investing doesn’t have to be complicated. If you invest in simple businesses that dominate their industries and return billions of dollars to investors through dividends and buybacks, you stand to make a killing in the market over time. It works. In fact, the stocks in our latest report, “The Top 10 Stocks For 2014,” have delivered a total return of 237% over the past five years following this simple strategy. To learn more about our top picks for 2014 –including several names and ticker symbols — click here.