Among the biggest winners in Friday’s early trading are Martek Biosciences (Nasdaq: MATK), Quiksilver (NYSE: ZQK) and Krispy Kreme (NYSE: KKD).

Martek Biosciences surges on Strong Results

“Firing on all cylinders.” That’s always the goal of very company, and a boast that Martek Biosciences (Nasdaq: MATK) can make right now. Cylinder one is a +14% jump in sales for the company’s line of fatty acids that are used to boost the health profile of infant formula and other foodstuffs. Cylinder two is the company’s acquired Amerifit division, which sells health and wellness supplements to major retail chains. Taken together, the two cylinders fueled a +34% jump in sales. That robust report is sending shares up +16% in Friday trading following release of the company’s second-quarter results after Thursday’s close.

Annual sales for Martek had been stuck at around $350 million for each of the last two years. But the combination of organic and acquired growth should push sales up toward the $450 million mark in the current fiscal year (October), and perhaps above $500 million by next year. In recent months, the company has made a big push into international markets, most notably in China.

As an added kicker, Martek is conducting clinical trials in hopes of proving that DHA, one of its primary fatty acids, is helpful in reducing memory loss in senior citizens while also boosting heart function. That could prove to be a fairly substantial new market for the company.

Action to Take –> Martek is set to boost profits roughly +20% next year to around $1.75 a share. But that understates the company’s earning power. The company is depreciating a large manufacturing facility in South Carolina, and amortizing the Amerifit acquisition. Excluding those non-cash items, actual free cash flow could approach $2.50 a share. Even with today’s pop, shares trade at just 10 times that figure. Shares surpassed the $20 mark today, but could approach $30 once the company’s growth drivers come into sharper focus.

Quiksilver Delivers

As we noted in our profile of the retail sector Thursday, it pays to stick with those names that are pulling away from the competition. There’s no need to chase struggling retailers simply because their stocks are very cheap. We suggested Kohl’s (NYSE: KSS) and Aeropostale (NYSE: ARO) as examples of effective retailers that are boosting both the top and bottom lines.

#-ad_banner-#But you may also want to consider retailers that have little top-line momentum right now, but hefty bottom-line momentum. Surfer-focused retailer Quiksliver (NYSE; ZQK) fits that bill. Sales are falling at a low single-digit clip, but rising gross margins are pushing profits up at a fast pace. Quiksilver just topped profit forecasts by a wide margin for the third straight quarter, which is pushing shares up +10% on Friday.

Surf apparel is a very discretionary item, so sales are unlikely to substantially rebound for at least another year or two. But when they do, Quiksilver should be a profit machine: The retailer earned at least $0.74 a share in fiscal (October) 2006, 2007 and 2008. And gross margins look even better now than they did then. So don’t focus on the near-term, as Quicksilver is unlikely to earn more than $0.30 a share in fiscal 2011. Instead, look out to fiscal 2012 and 2013, when per-share profits might rise +50% each year as the retailer finally benefits from impressive sales leverage.

Action to Take –> From a top-down view, there’s little to be excited about in retail at the moment, so there’s no need to chase these rallying shares right now. More than likely, shares are going to stay in the $5 range, and will only start to rebound later in the year when employment numbers improve and retail stocks move back into the fore.

Krispy Kreme Continues to Re-Ascend

Roughly six years ago, Krispy Kreme (NYSE: KKD) was seen as the next hot food chain. Shares hit $50 as analysts predicted an ever-expanding store base and ever-rising same-store sales. The first assumption seemed logical. But the second assumption was clearly naïve, and as management continued to open new stores at a rapid pace, over-saturation led to a steady decline in same-store sales. Before long, the donut maker was reeling under too much debt and too much overhead.

By 2009, shares lost more than -95% of their value, down to nearly $1, and many assumed that Krispy Kreme would need to declare bankruptcy. At that point, the board brought in a turnaround specialist to pare expenses, close underperforming stores and re-build the tarnished brand. That plan is working. Krispy Kreme just announced a $4.5 million first quarter profit and a +3.6% jump in same store sales. That’s helping push shares up nearly +9% in Friday trading.

The turnaround has taken place under the radar, as analysts no longer bother to follow the food chain. But management is pushing ahead in anonymity anyway, announcing plans to once again start expanding the store base. Presumably, this round of expansion will be more measured and sales and profits can grow at a respectable pace. Right now, shares are fully valued at more than 20 times projected profits, but as the expansion strategy is more deeply articulated, growth rates may inspire analysts to jump back on and talk up the “new growth story.”

Action to Take –> Better to get a firm sense of the company’s specific store expansion plans, and what that might mean for company profits a few years down the road. Today’s gain probably captured most of the near-term upside.