For years, satirical late-night TV host Stephen Colbert has been running a series on his show called "Better Know a District," which highlights one of the 435 U.S. districts and its congressional representative. While I am no Stephen Colbert, I am brutally inquisitive when it comes to the 5,000-plus listed companies on the U.S. stock exchanges.

That's why this week and every week from here on out, I'll make it a tradition to examine one seldom-followed company within the Motley Fool CAPS database and make a CAPScall of outperform or underperform on that company.

For this week's round of what I like to call "Better Know a Stock," I'd like to take a closer look at Palo Alto Networks (NYSE: PANW).

What Palo Alto Networks does
Palo Alto Networks is a recent IPO, debuting just two weeks ago, and is a provider of network security solutions to enterprise customers that include Qualcomm and Cricket Wireless, as well as government entities. The company provides application protection and virtual system upgrades and handles support and maintenance services for its customers.

Although Palo Alto has yet to report as a publicly traded company, it did release its sales figures from its S-1 filing which demonstrated sales growth of 265% in 2010 and 143% in 2011, with the company turning a nominal profit of $4.5 million over the past six months. It has lost money in the previous three fiscal years and has generated approximately $180 million in revenue over the first nine months of fiscal 2012.

Whom it competes against
As you can imagine, network security isn't exactly something that enterprises, service providers, and government entities can put off to a later date. It's a near-necessity, and that's where Palo Alto fits in.

Palo Alto offers the advantage of catering toward social-media-based enterprise customers that plan to utilize websites and cloud software that simply wasn't designed to be protected by older networking architecture. That's why built-in security networks, like those that you find with Cisco Systems (Nasdaq: CSCO) and Juniper Networks (Nasdaq: JNPR) work well for individual users, but they've been losing out to more specialized network security companies like Palo Alto that cater to enterprises.

Personally, I feel Check Point Software Technologies (Nasdaq: CHKP) and the smaller Sourcefire (Nasdaq: FIRE) provide the most direct competition. Check Point's customer retention and recurring revenue generated by upgradable options keeps its margins robust despite a very slow growth market in networking device sales. Sourcefire has one of the quickest growth rates in the network security sector (29.8%) over the past five years, but it's equally as pricey as Palo Alto, despite the fact that Palo Alto's sales are more than doubling each year.

The call
After reviewing the prospects for Palo Alto Networks, I've decided to go against the CAPS community grain and make a CAPScall of outperform on the company.

What strikes me as unique about Palo Alto is its focus on social and cloud-based applications. The key to its security applications is that they are predominantly self-managing, requiring little work from enterprise customers with regard to updates and upgrades. Few other networking security providers are able to offer a seamless integration of older and new architecture into one system, but Palo Alto can.

Palo Alto's real-time security products and network management services put it well ahead of its peers and is one reason why FBN Securities sees the company earning 11% of next-generation firewall market share by 2014. FBN further estimates that next-gen firewalls will account for $5 billion of the $8 billion in sales by 2014. Although I give little credence to analysts usually, this analysis appears spot-on and is a primary reason why I'm going against the CAPS community with this pick. Granted, only 10 CAPS members have weighed in so far on the stock.

You can follow this selection, as well as all previous CAPScalls I've made, by clicking here to be immediately whisked away to my CAPS portfolio.

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