If you see a strong-performing company hounded by naysayers and short-sellers, pay attention. You may be on to an ideal investment. If the company truly is a success, all that negativism eventually translates into buying interest for the stock.

Enter WebEx Communications (NASDAQ:WEBX). Here's a company that's grown its revenue six-fold over the past three years. Over the past six quarters, it's generated strong free cash flow as well. About all the company hasn't earned is respect. Case in point, as of June 9, a full 45% of WebEx's float was sold short.

This made for quite a setup for last night's blowout earnings report. WebEx grew its quarterly sales by 35% and trounced the consensus analyst estimates for both revenue and earnings. The stock responded enthusiastically, rising more than 8% in early trading.

Performance was strong across the board. Gross margins climbed to 83.4% from 82.2% in the year-ago quarter. Moreover, leverage on an expanding sales base provided a record net margin of 17.5%, up from 9.9%. The company also generated $12.9 million in cash, well ahead of reported net income of $7.9 million. This puts WebEx's free cash flow margin in excess of 25%, up from 21% in the prior year.

Just who is this WebEx, you ask? WebEx is the leader in corporate video-conferencing over the web, with more than 7,000 corporate customers. WebEx "meetings" allow users to share presentations, applications, documents and desktop, with full-motion video and integrated telephony. The company recently got a lift from a deal with Yahoo! (NASDAQ:YHOO), which will integrate WebEx software into the enterprise edition of its Yahoo! instant-messaging software.

Bears insist that WebEx software will eventually be commoditized, perhaps by the likes of Microsoft (NASDAQ:MSFT). But for now the future looks bright. Last night, WebEx called for 2003 revenue of $180 million to $190 million, besting the analyst consensus of $179 million.

Assuming WebEx maintains its 25%-plus free cash flow margins, a current market cap of $675 million may offer a reasonable entry for risk-tolerant investors.

You could have heard about WebEx in Tom Gardner 's Motley Fool Hidden Gems . Tom's not (yet) made it one of his top picks, but the stock's been the subject of lively debate among the Hidden Gem's community.