In the middle of the war on terrorism, one company wants to reassure you that all is well. "There, there, little investor," says Cogent (NASDAQ:COGT). "Everything will be all right. I'll protect you," it says as it gently takes hold of your hand. But hold on a sec! Cogent's not just holding your hand -- it's taking your fingerprint!

As a leading manufacturer of software and hardware used to electronically capture and analyze fingerprints, Cogent is a definitive "homeland security" play. (In fact, the Department of Homeland Security is Cogent's biggest customer, accounting for more than half the company's year-to-date revenues.) On Friday, Cogent also became the newest member of the public markets, arriving to thunderous applause as its stock rose nearly 50% in its first day of trading. Two weeks ago, the underwriters on the deal, Morgan Stanley (NYSE:MWD) and JPMorgan Chase (NYSE:JPM), had priced the offering in the range from $8.50 to $10.50. By Thursday, they had raised that range to $10 to $12 and, finding demand strong even after the increase, settled on $12 as the offer price.

Too optimistic? Nope. Even at $12, the bankers drastically underestimated the demand for this stock. Cogent began trading not at $12, but 33% higher -- at $16.02 -- and proceeded to climb further over the course of the day, finally ending at $17.98 a stub. At that price, the company now sports a market cap of $1.4 billion. With $9.2 million in net earnings in 2003, Cogent's trailing P/E ratio is a lofty 150 -- just shy of that other IPO success story of the year, Google (NASDAQ:GOOG), and its 165 P/E.

Just a glance at that number should sow doubt in an investor's mind as to whether Cogent is overpriced. To add to the confusion, consider the company's PEG ratio. In the first half of 2004, Cogent earned $12.5 million; compare that to the $0.6 million it earned in the first half of 2003 and you come up with a startling discovery. Just like steelmaker Nucor (NYSE:NUE), Cogent has managed to double decuple its earnings. So with a P/E of 150 and earnings growth of 2,000%, the company's PEG is actually a minuscule 0.07.

So which do you believe? Your gut, which tells you that a P/E of 150 feels "way too 1999" for comfort? Or your mind, which tells you that a PEG of 0.07 means "screaming bargain?" On this one, I say go with your gut -- 2,000% earnings growth can happen once in a company's lifetime. But long-term, not a chance.

Want to learn more about how the market gives birth to new public companies? Read these Foolish reports on other recent IPOs:

Fool contributor Rich Smith owns no interest in any of the companies mentioned in this article. The Motley Fool has a disclosure policy .