Force Protection ( FRPT) knows how to treat its allies. Just look at the favor the maker of blast-resistant military trucks did for some of its investors last month.

Last month, the South Carolina-based defense contractor quietly inked a joint venture with heavyweight military supplier General Dynamics ( GD).

But just before announcing that key deal to the public, the company raised $153 million by selling stock at the sharply discounted price of $11.75 a share in a private placement.

Those 13 million shares, representing roughly one-quarter of the total outstanding, have already delivered phenomenal returns. At recent prices, private placement buyers are up more than 80% over four weeks.

But they aren't the only investors who have become avid fans of Force Protection. The company's stock has risen 30-fold over the last year as fans catch on to the promise of its heavy-duty gear amid the war in Iraq. The stock could soon get even more popular: Force Protection is due to move its listing to the Nasdaq from the over-the-counter bulletin board next week.

Some observers clearly believe the company has big things ahead of it.

"Within the next month, we expect to see the largest contract yet for mine-resistant, ambush-protected vehicles to be awarded by the U.S. Marine Corps," SunTrust analyst Chris Donaghey wrote. In starting coverage Friday with a buy rating and $31 price target, he said he believes the company can generate $1 billion in annual revenue under the deal.

But Massachusetts investment strategist Peter Cohan has his doubts. Last month, Cohan notes, Force Protection announced problems with its past financial statements. Normally, he says, the Nasdaq sends out delisting notices -- not listing approvals -- when companies face restatements.

Cohan questions the timing behind Force Protection's recent private placement as well. Quite simply, he wonders why Force Protection sold its last round of stock so cheaply when -- based on the obvious value of the General Dynamics deal -- it could have waited a bit and sold less stock at higher prices instead.

Both Force Protection and its underwriter indicated that the company needed swift financing to meet surging demand for its products.

But "the company left a huge amount of money on the table," insists Cohan, who has no position in the stock. "Why did they do that? To me, it seems unfair to the public shareholders." The stock was trading at around $14 when the private placement went through.

Shares were rising $1.42 Friday to $21.40.

Perfect Story

C.E. Unterberg Towbin handled that private placement.

James McIlree, an analyst at the firm, calls Force Protection his favorite company. He has a buy recommendation and a $25 price target on the company's stock.

With the General Dynamics deal and the fresh capital in place, McIlree feels, Force Protection is equipped to meet escalating demand for its products. Indeed, he says, the company has now positioned itself to "win a very, very large contract that is pending" at this time.

Force Protection has distinguished itself by claiming that no soldiers have died while riding in its blast-resistant vehicles. The company has seen its revenue -- and its stock price -- soar as a result.

So far, Donaghey estimates, Force Protection has delivered about 350 vehicles to the U.S. military. But that number could explode, he predicts, as the government follows through with plans to order thousands of MRAP vehicles going forward.

Donaghey believes that Force Protection's revenue, which more than quadrupled to $42.2 million in the third quarter, could rocket past $1 billion next year if that happens.

"It's not hard to sell that concept to investors," Cohan says. "Maybe the stock is going up so much just because of the story."

But Cohan recalls a similar situation that brought some pain to investors in the end. He highlights Taser International ( TASR) as an example.

After trading below $5 for years, Cohan says, Taser's stock suddenly took off as investors grew increasingly excited about the company's product. Taser makes electric stun guns that allow police offers to stop suspects without killing them.

Banking on huge demand for the guns, Cohan says, investors pushed Taser's stock above $30 a share a couple of years ago. However, he says, the story soon soured amid rising safety concerns over the weapons, and the stock lost most of that ground. The shares fetch around $8 now.

Cohan worries that Force Protection could turn into another Taser down the road.

History Lesson

To be sure, Force Protection carries plenty of risks.

Perhaps most notably, the company is relying on an increasingly unpopular war for much of its business. Growing crowds within Congress want to do more than shield troops in vehicles like those made by Force Protection. They want to bring those troops home instead, which would diminish the need for such vehicles.

Still, Force Protection has enjoyed quite a run in the meantime.

Force Protection started out as one of three shell companies, carrying the name Boulder Capital Opportunities, a decade ago. One of its sister companies would go on to become Stan Lee Media, an online venture involving the maker of Spiderman.

Stan Lee Media suffered a spectacular crash during the Internet bust, widely blamed on colorful co-founder Peter Paul. Paul, an ex-con who previously made millions tricking the Cuban government, allegedly orchestrated a stock-manipulation scheme that triggered the company's demise. He fled the country, winding up in a Brazilian dungeon, before returning home to face his accusers.

Paul pleaded guilty to securities violations in 2005, The Miami Herald reported, and could face up to 10 years when he is sentenced.

Still, to this day, Paul holds the Clintons responsible for the company's demise instead. Paul orchestrated a huge fund-raiser for Hillary Clinton during her first Senate campaign. In return, the media has reported, Paul expected the former president to join Stan Lee Media's board -- and raise the profile of the company -- but claims the Clintons sent securities fraud investigators after him instead.

Paul responded with a high-profile lawsuit against the Clintons. However, The New York Sun reported last year that a judge has since dropped Hillary Clinton from that case.

Force Protection's own history sounds rather mild in comparison. The company previously operated as Sonic Jet Performance, a boatmaker that hit rough waters in its early years. Frank Kavanaugh, a fund manager and current Force Protection chairman, reportedly stepped in at that time to protect his investment.

Kavanaugh has since pocketed millions by selling loads of Force Protection stock in recent months.

"Former management lied to him," says Marc Robins of Catalyst Financial Resources, hired by Force Protection to handle "investor awareness" for the company. "He took control, sold the assets, bought the truck company and ran it for five years. ... I would not be too concerned about what the company did before March 2005 -- when it became a real company."

But Cohan, for one, would have paid little attention to the company even then.

"I've never bought a company on the bulletin board; I don't track them," he says. "But for a company to go from the bulletin board to being a real company -- with a real stock -- seems very rare. I get the feeling that very few companies have managed to do what this company has apparently done.

"It's an interesting transformation, to say the least."

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