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.

October 9, 2008 - Data Domain, Inc. (DDUP-NASDAQ) provides deduplication storage appliances for disk-based backup, archiving, and network-based disaster recovery. The company's appliances reduce the storage of redundant copies of data within enterprises (deduplication).

The company sells its appliances through a network of channel partners and direct sales force worldwide. It serves industries, including defense, education, entertainment, finance, government, healthcare, technology, legal, media, and retail. The company was founded in 2001 and is headquartered in Santa Clara, California.

What caught my attention was the sales ramp Domain has. In 2006, revenues totaled $46.4 million. In 2007, they were $123.6 million (up 166%). This year, the 10 analysts following the company project $256.8 million and next year, $372.4 million. Clearly, there are buyers for what Domain is selling.

Earnings are moving right up with sales. Last year there was a loss of 12 cents a share. This year, analysts project a positive 10 cents a share, followed by 26 cents next year. The next earnings announcement will be for the third quarter (ended September 30) on October 23. Look for a penny a share, up from a loss of 2 cents a share in the same quarter last year. Next quarter, expect 2 cents a share in the black compared to flat last year in the fourth quarter.

Data Domain doesn't go it alone. It partners with some of the best names in technology to achieve storage solutions for its customers. Some of its partners include: Cisco, IBM, EMC, Symantec, VMWare, Juniper Networks, Oracle, and CommVault. While Domain is still small compared to these leaders, it's recognized as one of the easiest systems to implement and continues to add new clients such as The Roger Williams Medical Center in Rhode Island.

Backing up data for large enterprises is mandatory for survival for every company. It's even required by regulators for banks and thrifts. If there is a disaster, these financial institutions need to seamlessly continue to operate. They can only do that with several back up capabilities. Furthermore, as we all know, data only grows. It doesn't shrink. So the demand for Domain's products will continue.

More numbers: While the trailing P/E (price to earnings) is a whopping 317, the forward P/E still makes one pause at 71. The stock traded as high as $41.14 last year. It recently hit a new low (stock has only traded last year and this year) at $18.03. Price to Sales is 5.83 and Price to Book is 4.83. There is $196.84 million in cash in the bank. That comes to $3.32 a share. There is no debt. Current ratio is 4.5. There are 59.3 million shares outstanding. Insiders own 62.90% of those. As of September 10, there were 15.29 million shares short, about 27% of the float. It would take 21 days of trading to cover those shares.

Data Domain is a growing company with products in high demand. Earnings have turned the corner, finally in the black. With a focus on efficiency, there should be continued sales growth as companies will look to integrate legacy programs, clean up data, and eliminate redundancy. Even if the economy slows more, Data may be one of the companies that feel it less than most.

- Company Web site: www.datadomain.com

- Ted Allrich