This column is for investors willing to take more risk and potentially receive more reward.  The stocks mentioned in this column are not recommended to buy or sell.  They're brought to your attention so you can investigate them further to determine if they fit your risk profile.  Most of the stocks will have less than $1 billion of market capitalization, have more volatility than other stocks, and oftentimes no earnings.  And some will have tremendous stories.

November 28, 2008 - F5 Networks, Inc. (FFIV-NASDAQ) and its subsidiaries engage in marketing, selling, and servicing products that optimize the delivery of network-based applications, and availability of servers, data storage devices, and other network resources. Its products include BIG-IP products that comprise Global Traffic Management and Link Controller; Fire Pass appliances, which provide SSL VPN access for remote users of IP networks, and applications connected to those networks from various Web browser on any device; Application Security Manager, a Web application firewall that provides application-layer protection against generalized and targeted attacks; and WebAccelerator that speeds Web transactions by individual network object requests, connections, and end-to-end transactions from the browser through to databases.

Further, it offers a range of services, such as consulting, training, installation, maintenance, and other technical support services. The company serves telecommunications, financial services, technology, manufacturing, transportation, and government sectors. F5 Networks markets its products and services through distributors, value-added resellers, and systems integrators. It has operations in the Americas, Europe, Middle East, Africa, Japan, and Asia Pacific. F5 Networks was founded in1996 and is headquartered in Seattle, Washington.

F5 is hot right now. Here's the latest earnings release from October 22:
F5 Networks Inc., whose products manage and route computer network traffic, said its fiscal fourth-quarter profit grew amid "robust demand" for its entry-level products. For the three months ended Sept. 30, the company earned $19.7 million, or 24 cents per share, up 53 percent from$12.9 million, or 15 cents per share, in the same period a year earlier.

Revenue rose 18 percent to $171.3 million from $145.6 million.

Analysts,on average, were expecting a profit of 20 cents per share on sales of $171.8 million, according to a poll by Thomson Reuters.

The company said while the quarter's sales were slightly below its guidance, demand for new entry-level products outweighed supply and led to a "significant year-end backlog of orders for those products."

For the full year, the company earned $74.3 million, or 89 cents per share, down from $77 million, or 90 cents per share, a year earlier. Revenue rose 24 percent to $650.2 million from $525.7 million.

Earnings were down a penny in one quarter, but sales were up. Backlog is growing. For the first quarter of fiscal year 2009, the company forecast 26 to 27 cents a share, above Wall Street analysts' expectations of 24 cents a share. In the first quarter of last year, eps was 21 cents. At the same time, management predicts sales will be between $172 million and $174 million vs the Street's estimate of $174.9 million.

In the last 3 months 6 analysts have rated the stock as a Buy or Overweight or Outperform, ranging from JP Morgan (Overweight) to William Blair (Outperform). 4 of those were upgrades, from Hold to Buy or Underweight to Overweight. The most recent was Wm. Blair on November 21.

For the full year, analysts see earnings of $1.68, well above the 89 cents of last year. In 2010, predictions are $1.97. Revenues for 2010 are forecast at $815.6 billion.

More numbers: Price to Sales for the last 12 months is 3.11 while Price to Book is 2.81. Operating margin was 16.09% and Profit margin was 11.43%. Return on Equty was 10%. Total cash in the most recent quarter was $190.19 million, making $2.41 per share. There is no debt. Current ratio is 1.73. Book value per share is $9.08. 52-week range is $17.70 to $35.85. There are 79.09 million shares outstanding with a float of 78.57 million. Insiders own 8.43% of the stock.

While growth is still strong, it has been slowing. Over the last 5 years, earnings grew, on average, by 34% a year. Over the next 5, analysts think the number will be 17.6%. And the stock has some high valuations such as the Price to Sales of 3.11. The P/E of 28 may cause some concerns but the Forward P/E of 12.7 should give some comfort. Of course, if all economies, domestic and foreign, continue to deteriorate, the earnings will be revised lower and push the P/E higher.

This is a solid company with no debt and good products. In spite of the challenges, profits continue to grow. While still relatively small, it's a stock that looks to be on the right track and deserving of aggressive investors' further investigation.

Company Web site: www.f5.com

- Ted Allrich