To all you penny-stock pushers out there (and you know who you are): Don't be sending me any more generous offers of free stock advice on the next new bottle-rocket stock from Phaser (ticker: RAYGUN). I've found a cheap fax stock, but it didn't take a fax to tell me about it -- just a subscription to Motley Fool Hidden Gems.

It's been more than a year since Hidden Gems profiled fax-by-computer company J2Global Communications (NASDAQ:JCOM) as a "Watch List" stock. And over the 14 months since we became acquainted with the company, J2 has risen an eye-popping 35% -- beating the S&P 500 by better than 20 points. And you know what? The company's still undervalued.

According to its earnings release, published on Thursday, J2 increased its 2004 revenues by 48% over 2003. Net earnings were down 12% -- but that was because this year, J2 actually had to pay taxes. The company's free cash flow performance belied the seeming disconnect between last year's taxless numbers and this year's results, out of which taxes took a 33% bite. Year on year, J2 grew its FCF by more than 52%, generating $44.3 million worth of the green stuff in 2004.

The company's current market capitalization of just below $850 million gives it a price-to-free cash flow ratio of 19. Your average S&P 500 large cap, in contrast, sports a P/FCF ratio of 20. Does that means J2 is a worse-than-average company? Far from it. If you look at a couple of easy-to-find metrics, you'll see that the average S&P company achieves returns on equity and assets of 20% and 11%, respectively. J2 handily trounces both numbers, with an ROE of 28% and an ROA of 20%. The company also boasts an essentially debt-free balance sheet, along with $66 million in cash and equivalents in the bank.

As for its competition, don't believe Yahoo! Finance when it tells you that CommTouch Software (NASDAQ:CTCHC) or Critical Path (NASDAQ:CPTH) are J2's peers. Neither one holds a candle to J2 in terms of revenue or profits. Its real competition is Adobe (NASDAQ:ADBE). And Adobe is priced at a premium to the market -- its P/FCF is 27 -- but its much more diversified business is growing at about one-third the speed of J2's.

When it's all said and done, I'd rather put my money on J2 than on any of its competitors, real or imagined.

It's not just J2 that's done well. As a whole, Motley Fool Hidden Gems recommendations are trouncing the market, and they've done so since the newsletter's inception. As of this writing, we're up 45% since we started writing, against a 10% rise for the S&P. Want to see how we do it? Don't send us a fax -- just click here and start your free trial subscription today.

Fool contributor Rich Smith has no position in any of the companies mentioned in this article.