The Middleby Corporation (MIDD) is a leading manufacturer of commercial kitchen and food processing equipment that competes with divisions of Illinois Tool Works (ITW), Manitowoc (MTW) and United Tech (UTX). Founded in a merger of two companies in 1985, Middleby has grown by acquiring competitors and complementary brands and, through superior management, improving operational efficiency and sales.

The current CEO Selim Bassoul owns 5% of outstanding shares and is well respected as a manager. He has led Middleby from obscurity to a darling stock of Fools (the Motley sort) and small cap investors everywhere. Middleby has had quite a run, with revenue growth averaging 18% annually over the last 9 years, with net margins improving from 1.6% in 2001 to 9.6% as of 9/27/08.

Hurco (HURC) is a leading manufacturer of computerized machine tools used in metal cutting in a variety of industries that include aerospace, defense, medical equipment, energy, electronics and automotive. They incorporate a proprietary computer control system for use on a PC system that improves the quality of cutting and ease of use. In addition to producing the machinery and control systems, Hurco also provides software upgrades, parts, service and support to customers. Hurco manufactures its cutting machines in Taiwan, and sells its  products in Europe, Asia and North America via direct sales and through independent distributors.

Hurco's competitive advantage appears to be the computer controlled cutting system it has developed. In machine cutting, the setup and accuracy of the process greatly affects efficiency and cost. If Hurco is able to decrease setup time and reduce errors via its proprietary software, it would give the company an advantage over its competitors, such as Hardinge (HDNG), that don't have the sophistication of the Hurco product. This is reflected in its return on capital of 24.15%, net margins of 11.1% and 5-year sales growth of 22.7%, all of which are higher than any of its peers. In addition, it has $4.50 per share in cash and no long-term debt.

Thor Industries (THO) is the leading manufacturer of travel trailers ahead of Berkshire Hathaway's (BRK.A) (BRK.B) Forrest River, and they also make motor homes and buses. Travel trailers and 5th wheels account for 68 percent of sales, with motor homes at 17 percent and buses at 15 percent. It sells under the brand names of Airstream, Dutchmen, Four Winds, CrossRoads, Keystone, Corsair and Citation. Thor's bus division sells shuttle and transit buses to airports, city governments and tourist transport companies.

Thor has benefited from excellent management that started the company more than 25 years ago and the founders still own 36 percent of the shares outstanding. They have a track record of operational efficiency and excellent capital allocation. Thor's return on equity [ROE] has average 19.81 percent over the past 9 years with return on retained earnings of 15.15 percent. They acquire mismanaged businesses that compliment Thor's current operations and make them competitive again, taking advantage of the cyclical nature of the business to capture market share from competitors burdened by debt. Thor's shares outstanding have decreased an average of 0.7 percent per year since 2004, on top of which they have $119.6M in cash and no debt.