Former Motley Fool Stock Advisor recommendation Websense (NASDAQ:WBSN) recently set a 52-week high by soaring 14% to $38.28, following a solid second-quarter earnings report. The company, which provides employee Internet management (EIM) software, reported a quarterly sales increase of 37% and a 42% increase in net income.

Business will not be easing up, either. Deferred revenue, a reflection of the company's subscription-based products, increased $9.2 million to a record $105 million.

The company's gross margin, at 93%, is outstanding -- even for a software company. How good? Microsoft's (NASDAQ:MSFT) gross margin is 82%, and Oracle's (NASDAQ:ORCL) is 77%. Better yet, operating margins increased 49% to an equally outstanding 33% (Oracle also exceeds that level).

The company's cash and cash equivalents increased by $12.6 million to a jaw-dropping $212.8 million. That's a lot of cash for a company with no debt and quarterly revenue of $26.6 million.

All of this good news has hardly gone unnoticed on Wall Street. The stock is up 60% over the last 52 weeks and sells for 34 times estimated 2005 earnings. That is rich even for a rabbit such as Websense.

The high stock price reflects the company's rapid growth in international markets and the ever-increasing revenue from existing customers. It was no surprise that the company's guidance for the next quarter exceeded analysts' estimates by $0.02 a share.

Websense is well-positioned to prosper. In a computer-based world where spyware and other threats can cripple a company's operations, Websense offers economical solutions.

For investors considering an investment in Websense, read fellow contributor Matt Thurmond's look at the company's free cash flow. There is a lot to like. But, given the current price, this commentator will look elsewhere.

Fool contributor W.D. Crotty does not own stock in any of the companies mentioned.