Under the Radar: McAfee Secures Growth

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The Nasdaq has climbed 13% this year as technology darlings Amazon(AMZN Quote), Apple(AAPL Quote), Google(GOOG Quote) and Research in Motion(RIMM Quote) have each increased more than 30%.

Tech stocks remain investor favorites because of their clean balance sheets, high margins and growth prospects. Santa Clara, California-based McAfee(MFE Quote) is a mid-cap technology company that has enjoyed a solid run, but is due for further gains as consumer and business spending rebound.

In addition, McAfee is set to benefit from an Obama administration report last month that said so-called cybersecurity is critical for the country's information infrastructure and national security.

McAfee supplies computer-security services for both individual computers and networks. The company posted a record first-quarter performance, aided by a 9% revenue boost from the addition of San Jose, California-based Secure Computing, which was acquired last September. Dave DeWalt, who joined McAfee as chief executive officer in 2007 after overseeing sales at EMC(EMC Quote), led the purchase.

Sales rose 21% to $448 million, as corporate revenue increased 28% and consumer revenue gained 12%. North America was the strongest growth region, increasing quarterly revenue by 34%. Latin America and Japan boosted sales 31%. McAfee has impressive global diversification. International revenue accounted for about 41% of first-quarter turnover.

At the same time, net income ascended 77% to $54 million, and earnings per share climbed 89%.

Still, McAfee's financial position deteriorated slightly as a result of the Secure Computing acquisition. Since the first quarter of fiscal 2008, the cash balance has declined 6% to $752 million and debt went from zero to $100 million. A debt-to-equity ratio of 0.13 indicates a relatively strong financial position. TheStreet.com Ratings gives McAfee a financial strength score of 7.9 out of 10. It's rated "buy."