Although many well-known stocks have been generating fantastic returns, a lot of money has also been made in the last places you might expect…

Like kitchen appliances, for instance. I mean, who’d ever think they could still propel a company’s stock to massive gains?

#-ad_banner-#Well, they sure have for one obscure mid-cap company that’s actually a leading manufacturer of ovens, ranges and other cooking equipment for commercial and residential use. The company’s stock is up more than 800% in the past 10 years, so you’d think it would be all over the financial news.

But it’s not one you really hear much about, and even some top mutual funds haven’t paid it much mind. For instance, it’s nowhere to be found in the top 10 holdings list of Neuberger Berman Genesis (Nasdaq: NBGNX), a famous small- and mid-cap equity fund that’s beaten the market handily over the years (including expenses and fees).

In fact, the stock is only #38 in NBGNX’s 100-holding, $14.7 billion portfolio. And its overall weighting of barely 1% is far too small to have much of an effect on fund performance.

Now, I certainly don’t mean to knock Neuberger Berman Genesis. It’s obviously a great fund.

I’m just pointing out that even Wall Street’s best have underappreciated Middleby Corp. (Nasdaq: MIDD). And that’s OK — because this $4.8 billion mid-cap company still has plenty of room for growth can still deliver very attractive returns.

Middleby’s revenues, which jumped more than fivefold to $1.5 billion a year from $271 million in 2004, come from three business units. The largest, commercial foodservice, currently hauls in 63% of revenue through the sale of cooking and warming equipment to commercial food preparers like fast-food and full-service restaurants, convenience stores and hotels.

The #2 business unit, food-processing equipment, accounts for 21% of sales with products geared toward customers who prepare precooked meats and baked goods. This includes frying systems, blenders, slicers, battering equipment and a variety of ovens.

The smallest business unit, residential kitchen equipment, generates 16% of revenue through the sale of ranges, refrigerators, dishwashers and other kitchen appliances for residential use. This unit is still very new, having been established in late 2012 when Middleby bought the well-known Viking brand of high-end restaurant-style residential cooking ranges for $362 million.

Middleby’s sales and earnings have risen an impressive 19% and 23% per year, respectively, since 2004, and I think comparable growth rates are possible in the coming three to five years. Along with a firming real estate market and more strong performance from the two eldest business units, a couple factors should enhance future growth.

The Viking acquisition could be a huge one.

Before Viking, Middleby’s residential kitchen appliance sales made up only 1% to 2% of total revenue, compared with 16% currently. Thus, Viking represents a major foray into the residential market, which obviously offers enormous potential because of its massive size.

This venture already appears to be paying off. When Middleby bought Viking, the latter had annual sales of about $200 million. Now, only a year and a half later, that figure is effectively $240 million since the lion’s share of revenues from Middleby’s Residential Kitchen Equipment unit — currently about $240 million — are attributable to Viking.

It hasn’t been perfectly smooth sailing, though. Viking has paid a bit of a price in the short term for necessary long-term reorganization initiatives (like dealer consolidations), which resulted in some lost revenue, higher distribution costs and margin contraction in the first quarter. However, management expects Viking’s performance to rebound in coming quarters now that the reorganization is largely complete.

Along with potentially exciting domestic growth, Viking should have ample expansion opportunities in Asia and other emerging markets where high-end product demand has been climbing because the populations are becoming generally more prosperous. During the next three to five years, it’s quite feasible for Viking to become the $400 million-a-year business it was at its peak right before the 2008 housing crisis.

But in management’s view, the best growth opportunity in coming years could be Middleby’s so-called Kitchen of the Future program in which the firm provides commercial customers far more efficient kitchen designs that incorporate Middleby products. Because these kitchens rely much more on automation, they require fewer employees, reduce food preparation time, and help to ensure consistency of preparation. They also decrease energy use by 30%, analysts estimate. All this allows the customer to be more profitable.

If you’re thinking the Kitchen of the Future concept might work especially well in fast-food and fast-casual restaurant settings, you’re right. In fact, Brinker International (NYSE: EAT) has already invested roughly $100 million in the past few years to bring such kitchens to its well-known Chili’s fast-casual restaurant chain, which has more than 1,000 locations nationwide.

During a first-quarter conference call, Ed Rensi, acting CEO of the popular barbecue chain Famous Dave’s of America (Nasdaq: DAVE), described Middleby as having “some of the best restaurant technology in the world.” He added that his company is partnering with Middleby to determine how to improve kitchen efficiency at Famous Dave’s to reduce labor and utility costs, improve product consistency, and deliver a higher level of quality.

At this point, 16 restaurant chains are testing Middleby’s Kitchen of the Future concept, and management believes the program should begin having a positive effect on sales by next year.

Risks to Consider: With all it has going on, Middleby has opted to increase debt financing in recent years, and long-term obligations have risen to $570 million from just $2 million in 2011. While the company’s leverage isn’t yet out of whack relative to industry averages, shareholders should monitor the situation since it could become a concern if debt keeps rising.

Action to Take –> Because of Middleby’s growth initiatives, I’m confident the company is capable of increasing the bottom line 23% a year for the next five years, as analysts project. If that occurs, the stock could soar another 140% to more than $200 a share by 2019 from about $83 currently. Despite an elevated price-to-earnings (P/E) ratio of 29, shares are a very good buy right now because of the strong likelihood of further substantial price gains. 

An eccentric Texas woman who has a history of finding winners like Middleby where nobody else sees them is producing annual returns of up to 510% and has picked winning investments roughly 85% of the time. To learn how she’s doing it — and how you can do the same for your portfolio — click here.