ZAGG Eats More Bears

It was another strong quarter for gadgetry accessories specialist ZAGG (NAS: ZAGG) .

Net sales soared 106% to $55.5 million. Last summer's acquisition of iFrogz is naturally padding ZAGG's top-line results, but it's impressive growth all the same. Gross margins contracted and earnings climbed 55% to $5.1 million, or $0.16 a share.

Analysts were only expecting a profit of $0.14 a share on $52 million in revenue. ZAGG has now produced back-to-back blowout quarters after a couple of mortal showings last year.

ZAGG continues to make inroads. Wal-Mart (NYS: WMT) will finally begin stocking invisibleSHIELD -- the protective screen coverings for smartphones and tablets that put ZAGG on the map -- in two weeks.

It was easy to expect a strong quarter. We already knew that Apple (NAS: AAPL) sold a whopping 35 million iPhones and nearly 12 million iPads during the same three-month period. It only takes a sliver of those buyers to turn to ZAGG products to protect or enhance those purchases to move the needle.

ZAGG may be in a competitive market, but the company's deep retail penetration in consumer electronics stores, warehouse clubs, and even wireless carrier shops gives it an edge in pushing its premium-priced offerings.

There's never a shortage of critics when it comes to ZAGG. The stock took a nearly 8% hit yesterday -- ahead of its quarterly report -- after a Seeking Alpha post called into question the company's reported revenue.

It was a laughably flimsy skewering, relying largely on interviewing five Best Buy (NYS: BBY) mobile managers to claim that ZAGG is overstating its revenue. Really? Asking managers of a chain that is shrinking in scope to assess how many units they're selling is enough to extrapolate to more successful retailers and ZAGG's growing distribution?

The skepticism will continue. Nearly a third of ZAGG's shares are sold short. Too many people feel that ZAGG's accessories are commodities and shoppers gravitating online will make it more tempting to settle for dirt cheap knockoffs. Others don't trust management.

It's OK. A little skepticism is healthy -- as long as it continues to deliver bear-silencing results.

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At the time this article was published The Motley Fool owns shares of Best Buy. The Fool owns shares of Apple.Motley Fool newsletter serviceshave recommended buying shares of Apple.Motley Fool newsletter serviceshave recommended creating a diagonal call position in Wal-Mart Stores.Motley Fool newsletter serviceshave recommended creating a bull call spread position in Apple.Motley Fool newsletter serviceshave recommended writing naked calls on ZAGG. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

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