Over the past year, Guidance Software (NASDAQ:GUID) has had major product launches as well as an IPO. That's a time-consuming combination, but management has pulled it off nicely. More importantly, the company's growth continues to be strong.

In the fiscal fourth quarter, revenues increased 38% to $17 million. However, there was a net loss of $900,000 or $0.05 per share, which compares to a net gain of $407,000 or $0.02 per share in the same period in 2005.

Founded in 1997, Guidance has a suite of software products to help companies conduct digital investigations. Last year, it upgraded its key products, EnCase Forensic; EnCase Enterprise; and eDiscovery. These products help with tasks like searching, preserving and analyzing data on servers, desktops, and laptops (without disrupting the workforce); locating relevant data; and authenticating the data for court purposes.

There are similar products on the market from Symantec (NASDAQ:SYMC), McAfee (NYSE:MFE), and EMC (NYSE:EMC). However, Guidance's offering is integrated, comprehensive, and battle-tested in the court system (the software has been cited in more than 35 judicial opinions).

A potential growth driver for Guidance is a recent change to the Federal Rules of Civil Procedure, which essentially requires the use of digital investigative software for pretrial discovery. As a result, the company has been investing in its infrastructure, with headcount increasing from 221 to 338 over the past year. On the conference call, management said it's a "land grab" for the eDiscovery market and that Guidance wants to "dominate" it.

Management forecasts 2007 revenues at $72 million-$76 million and net income to range from a loss of $0.16 to a gain of $0.02 per share. However, as I mentioned in a recent article, the valuation is hefty, at about 4 times revenues (based on the $76 million forecast). While the company is definitely strong and positioned for growth, there is no rush to get into the stock.

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Fool contributor Tom Taulli does not own shares of any company mentioned in this article.