BTU stock sizzles with 394.9% gain

Temperatures inside the high-tech manufacturing ovens of BTU International Inc. of North Billerica can climb to 3,600 degrees.

The stock's been pretty hot, too.

Shares of BTU, which manufactures devices used in making computer components, solar panels, fuel cells, and a range of other products, soared 394.9 percent in the year ended March 31. That made BTU the best-performing stock among publicly traded Massachusetts-based corporations during that period.

Sales are small, less than $21 million in the first quarter. But the analyst who follows the company most closely, Robert Maire of Needham & Co. Inc., says BTU has enough room to grow that the stock could go higher still. Late last month Maire issued a new ''buy" rating, predicting shares could rise, from the day of his report, another $7.86 to $30. They closed Friday at $17.38.

BTU's story illustrates the importance of a business slashing costs fiercely, focusing its product line, operating globally, and executing a successful China strategy. About half the two-decade-old company's employees are based outside the United States, according to chief executive Paul J. van der Wansem, who has been company chairman since 1979, was chief executive from 1979 to 2002, and was brought back as chief executive in late 2004.

In April 2004, BTU opened a Shanghai plant to serve East Asian customers -- insisting on having workers be on its own payroll, not employees of a joint-venture partner -- and has since expanded it three times. Shanghai accounts for 15 to 20 percent of BTU's total output, and the lower costs there are one factor that's helped BTU improve gross margins from about 24 percent in 2004 to 38 percent now, van der Wansem said.

BTU's key intellectual property is knowing how to maintain extremely hot, extremely stable temperatures inside manufacturing ovens, including processes that require baking with ultraflammable hydrogen gas. BTU technology can be used in all sorts of ways, from producing uranium fuel pellets and high-tech chips to making glass eyes for teddy bears.

But ''we found that you can get so distracted and unfocused" by trying to serve all markets, van der Wansem said. Sharpening its focus on just two key industry segments -- electronics and energy -- has helped BTU boost sales and profits.

Other fast-growing high-tech and life-sciences companies dominate the list of top Bay State stocks. Number two is a company with feet in both camps: Advanced Magnetics Inc. of Cambridge, which makes tiny, supermagnetic iron particles used in producing pharmaceuticals. Its stock rose 335.6 percent in the year. Other hot stocks: Waltham medical diagnostics maker Neurometrix Inc., Vertex Pharmaceuticals Inc. of Cambridge, Bedford women's health diagnostics maker Hologic Inc., Burlington computer speech technology provider Nuance Communications Inc., and Globe 100 Company of the Year Akamai Technologies Inc. of Cambridge.

Illustrating how fickle and volatile the life-sciences sector can be, though, three of the five worst-performing stocks last year were health and pharma issues: NitroMed Inc., a Lexington producer of heart medications; Epix Pharmaceuticals Inc. of Cambridge; and Arrhythmia Research Technology Inc. of Fitchburg, which makes heart monitoring electrocardiogram technology components.

Arrhythmia has long been a roller coaster stock, Epix was rejected on a key federal medical product approval, and NitroMed's actual sales of a heart drug for African-Americans failed to live up to hype.

At the very bottom is Boston Communications Group Inc. Investors whacked 62.8 percent off the value of the Bedford wireless telecommunications services company's stock after BCGI lost a $165 million patent infringement lawsuit verdict last year over a system it sells for cellphone companies to offer prepaid calling plans. That made BCGI -- a Globe 100 growth and stock darling in many past years -- the worst Massachusetts-based stock of the year.

BCGI plans an aggressive appeal of what it calls a junk patent claim that could last into 2007.

In the meantime, it's still expanding and diversifying internationally, buying businesses in India and Israel, offering new products for parents and business owners to restrict kids' and employees' cellphone use, and hiring 100 employees.

''We look forward to our opportunity to win on the appeal," chief executive E.Y. Snowden said, ''and ultimately gain back a large return for our shareholders."

Peter J. Howe can be reached at howe@globe.com.