(FORTUNE Magazine) – Tired of hearing about all those phenomenal Internet IPOs you've missed out on? Like the ones that soar 500% on the first day of trading and then end up only going downhill from there? Well, here's one that may be different: Foundry Networks. Based in Sunnyvale, Calif., Foundry makes equipment that speeds up Internet access for customers like America Online. With business booming as Internet usage explodes, it's likely that demand for Foundry's gear will continue to surge. That's among the reasons the stock, which was offered at $25 in September, now trades at $253 a share.

In fact, Foundry is just one of a number of next-generation networkers that saw their stocks race higher this fall. Extreme Networks, Brocade, Juniper Networks, Alteon Websystems, and Sycamore Networks all went public in 1999 and now boast triple-digit returns.

So what makes Foundry different from the rest? For a startup, Foundry possesses an unusual mix of attributes: a diversified customer base, actual profits, and, most important, lower prices than those of the competition. For instance, its flagship product, a fully loaded Big Iron 8000 router, sells at $149,450, while its competitor's flagship, Cisco's Catalyst 6509, goes for almost twice that. Foundry's core products--gigabit Ethernet switches, routers, and server load balancers--help move data over the latest generation of high-speed networks, transmitting information at up to one billion bits per second. By being first to market with high performance and low-cost equipment, Foundry has won new customers, like AOL, Hewlett-Packard, and Mitsui.

The other factor pushing Foundry's shares higher is the possibility of a buyout. Wall Street woke up to the sector's potential value last summer when Cisco paid a whopping $6.9 billion for little-known networking firm Cerent Corp. Now Nortel is hoping to buy privately owned optical networker Qtera for $3.5 billion. And with Foundry going after Cisco's core market, there is plenty of speculation that Cisco or some other giant may buy Foundry.

But be warned: Foundry is not a stock for anyone remotely risk averse. Trading is dominated by momentum investors, and that means tremendous volatility. Traditional valuation tools won't be of much help either, as Foundry trades at 665 times 1999 earnings. Plus, it's one thing for Foundry to have a headstart on Cisco and quite another to maintain it.

Still, Foundry CEO and co-founder Bobby Johnson says he's not worried about ending up in Cisco's cross hairs. "Cisco is trying to be a whole lot of things to everybody," says Johnson. "They're like GM. They make buses, trucks, and cars. We're like Porsche. We make very specific things that go fast."

And despite the buyout talk on Wall Street, Johnson insists his company isn't for sale. After selling his first startup, Centillion, to Bay Networks in 1995 for $140 million, Johnson says he wants to be his own boss for now. "We're going to create shareholder wealth the old-fashioned way," he says, "by growing the business." And with a market cap of $14 billion, Johnson can use Foundry's highflying shares to buy smaller rivals and keep growing. "Johnson looks at Foundry as a platform to build a big competitor to the giants out there," adds J.P. Morgan's communications equipment analyst Greg Geiling. "This is one company to keep an eye on."