It looks like my purchase price was in the same area as yours.
That $5.50 price target will be raised as we approach the next earnings announcement and once the numbers are released. This is going to be a good quarter, there is no debt, all profit goes straight to cash balance. My guess is that new price target will be moved up to something around $7.50 or $8.
I don't think now is the right time to sell - the news coming out is all good, and the company has definitely turned the corner. This is the time you want to be long - biggest gains are ahead.
However, outside of your reasons for considering to sell NLS, I've also listened to experts say that if you're sitting on gains, because of the tax changes coming in 2013, sell and take capital gains now - you can always buy back the very next day if you like since the 30 day wash rule only applies to losses.
The issue is this stock has a definite trend to sell on actual earnings after rising before earnings in the spring. Plus, after the 1Q earnings fall quite a bit in Q's 2 and 3. Thus...holding after 1 Q earnings might not make sense as you will (probably) have another buying opportunity at a lower price in the middle of the year. 75% of earnings comes in the 4th Q, 20% in 1Q and the rest the rest of the year. So a cyclical stock. And the stock is going up in expectation of 4th Q being good.
BUT....trends are meant to be broken and right now we are definitely in a bull trend. And trend analysis says not to sell until the trend is broken. That would mean a return to a low lower than $3.50 now after today. The 3 month chart is amazing. Simply amazing. It is a bull trend technical charters dream. And this gives me hope for a price above pure valuations and I won't sell as long as the bull trend is clearly in effect.
But I personally bought the stock on a valuation basis of earnings. And my # is $0.36*15= 5.40 (but reset to $5.50) because I expect them to beat $0.19 in the 4th Q. But the question will be how to treat this stock. Should I treat it as a fast grower and give it a 20 P/E? Or as a normal grower with a 15? Or a slow grower with a 10? The "safe" bet is to go with normal growth of 15. And next year (IMHO) is tough to beat this year unless the economy improves more than I expect.