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.

May 21, 2009 - Sourcefire, Inc. (FIRE-NASDAQ) provides enterprise threat management and intelligent security infrastructure solutions in the United States and internationally. The company offers the Sourcefire 3D (discover, determine, defend) system, which comprises its hardware and software products for protecting computer network assets.

The company's Sourcefire 3D system's hardware products include Sourcefire defense center, which unifies network security functions; and Sourcefire 3D sensors for processing its software applications. This system also consists of Sourcefire Vulnerability Research Team, a team of network security professionals responsible for writing, testing, and publishing Snort rules to defend against known and zero-day exploits.

The Sourcefire 3D system's software products comprise Sourcefire IPS, an intrusion prevention system; Sourcefire RNA, a real-time network awareness solution; Sourcefire RUA, a real-time user awareness solution; and Sourcefire netflow analysis for detecting suspicious deviations from established baselines.

The company also provides Sourcefire customer support services, including online technical support, over-the-phone support, hardware repair/advanced replacement, and ongoing software updates for its products; Sourcefire product services, which include professional services solutions to provide customers with practices for planning, installing, configuring, and managing components of Sourcefire 3D System; and Sourcefire education and certification services for Snort and its other products.

Sourcefire, Inc. serves financial institutions, defense contractors, healthcare providers, information technology companies, telecommunication companies and retailers, and government organizations. The company was founded in 2001 and is headquartered in Columbia, Maryland.

What caught my eye about Sourcefire was the ramp in revenues. They were $44.9 million in 2006, then $55.9 million in 2007. Last year, they hit $75.7 million. That's an increase of 66% in 2 years. Analysts predict sales of $88.83 million this year and $99.43 million next year. At the end of 2008, one reseller, immixGroup, accounted for 11% of all revenues.

Earnings were negative in 2007 and 2008, minus 32 cents and minus 24 cents respectively. But analysts see positive results for this year of 18 cents, then next year at 26 cents. The company reported first quarter earnings on May 1, showing a loss of $1.1 million. Last year in the first period, the loss was $2.3 million. Revenues went to $18.6 million, well above the $13.7 million in the same quarter of 2008. The company expects revenue for the second quarter to be in the range of $18.7million to $20.2 million, with a net loss per share of 4 cents.

The company went public in 2007. The stock started at $18.83 and immediately headed lower, reaching $7.23 by the end of the year. Then it rebounded a little, only to then get hit with the rest of the market by the latter part of 2008, finding a new low at $3.89 in November. But then it started to go higher and hasn't stopped. It currently trades at $11.50, off only a small percentage from its recent high of $12.80.

More numbers: There's plenty of cash in the bank at $104 million. That's $3.97 a share. The current ratio is 4.28. There are 26.14 million shares outstanding with a float of 18.4 million. Insiders own 45.39% of the stock. Institutions own 36.8%. Price to Sales is 3.78. Price to Book is 2.78. Book Value is $4.20. There is no dividend.

If you think hackers will continue to threaten and disrupt corporate and government systems, then you'll want to spend more time investigating Sourcefire. It's obviously got good products and services since sales are increasing at a respectable rate, even with a poor economy. But the ever elusive profitability is the problem. Hopefully, this is the year management finds it. Even if profits hit analysts' projections, the price is a little steep at these levels.

Company Web site: www.sourcefire.com

- Ted Allrich