Five Lessons From a Winning Stock Play

Larsen Kusick is a research associate for the Stocks Under $10 service at TheStreet.com. For a more information about Stocks Under $10 and a free trial, click here.

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Those who don't follow the small-cap sector are probably unfamiliar with Vasco Data Security (VDSI Quote), one of the top-performing stocks in the group since the beginning of the year. Investors in Vasco have been rewarded nicely in 2007 as the company posted better-than-expected financial results in both of its quarterly announcements this year, first in February and again last week, helping shares log a hefty 82% gain in just over four months.

Vasco is currently a Two-rated holding in the Stocks Under $10 model portfolio, meaning that we believe there's still enough upside to continue holding the stock, but that the risk/reward profile is not good enough to recommend additional purchases at the current price level. Nevertheless, investors can learn a number of valuable lessons by taking a look back at the company's progress in the almost two years since it became part of the model portfolio.

Lesson No. 1: Products and services meet a growing need.

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