The Internet and electronic commerce have become such potent stock market stimulants that investors will flock to the stock of any company that announces plans to put its business online.

Internet-induced investment lust can turn a vitamin vendor that has a World Wide Web site into an e-commerce entrepreneur. Going on the Net might morph a mundane mail-order retailer into an online superstore. Simply signing an advertising contract with America Online Inc. last week was enough to double the stock price of Drkoop.com's electronic medicine show.

Point-and-shop start-ups are the seasonal fare of point-and-click investors, but there are better ways to capitalize on the e-commerce craze. Investing in companies that stand to benefit from the growth of e-commerce looks to be more lucrative -- and less risky -- than finding bargains in the stocks of Web merchants.

Buying stock in any of the two dozen online drugstores, vitamin shops and cosmetic parlors is a long shot, compared with investing in Internet infrastructure stocks such as Cisco Systems Inc., which makes the "routers" that control traffic on the Net. Cisco's stock is selling closer to its all-time high than most of the Internet commerce and content companies. It's up 44 percent so far this year, on top of a 150 percent gain last year and 31 percent appreciation in 1997, before the Net boomed.

The e-commerce explosion is driving demand not only for Internet hardware, but also for other ingredients that are essential for doing business on the Web, such as the security systems needed to protect online transactions.

A pair of Maryland companies, both considered leaders in their particular aspects of computer security, are cited by analysts as examples of firms that benefit from electronic commerce without actually doing it.

Axent Technologies Inc. of Rockville and Information Resource Engineering Inc. of Baltimore are expected to be long-term e-commerce winners, but in the short term they've been getting much different evaluations from the stock market.

Information Resource's stock has been one of the best performers in the mid-Atlantic region this year. At Friday's closing price of $30.56 1/4, it's up 228 percent since Dec. 31 and 289 percent over the last 12 months.

Until last week Axent was among the worst of the local tech stocks. Its stock hit $38 a share in late January, then plunged to about $8 in April after the company reported an unexpected loss for the first quarter.

After creeping back over the last several months, the stock exploded Tuesday, jumping $2 a share and continuing to rally for the rest of the week. Axent ended the week at $16.37 1/2, its highest point since April.

Chief executive John Becker describes Axent as "fundamentally a good company" that's beginning to recover after being "punished" by Wall Street for the first-quarter flameout. "As people take a good look at it, looking for value, I think they're seeing Axent as a value play," he said.

Axent's first-quarter profit was wiped out by a combination of a costly acquisition and an unexpected slowdown in sales because of the year 2000 computer glitch. Like many computer software and services companies, Axent found its customers are spending so much money adopting computers to recognize turn-of-the-century dates that they are cutting back other expenditures. Because of the cutbacks, first-quarter sales grew just 5 percent, to $21.4 million.

The "crowding out" of computer security projects by Y2K costs has hit several competitors and Becker said he still is "very cautious about this market. There continue to be market issues that will affect the entire industry. There's not a lot we we can do."

Axent's strategy is to build itself into a one-stop source for computer security products and services. "Axent probably has the broadest product range out there," said David Hilal, an analyst at Friedman, Billings, Ramsey Group Inc. of Arlington. "You can get 80 percent of your security needs out of Axent, others can provide no more than 20 percent."

Axent's two key technologies are "fire walls" that keep out unauthorized users and "intrusion detection" systems that warn of hacker attacks. Axent sells stand-alone software, but it pushes a "complete security solutions" package that includes consulting and service.

Demand for better security "is being more and more driven by e-commerce and e-business," said Becker. Controlling internal access to sensitive corporate information used to be the main concern, he said. "As people move to electronic commerce, the problem gets exponentially higher. You're exposing yourself to millions of users. That is going to start to drive our business more. The information security market will grow in tandem with e-commerce and e-business."

While Axent aims to make itself the ubiquitous computer security brand, Information Resource Engineering takes the opposite tack: creating security technology that is embeded in the system, invisible to the average user.

"You can buy our products or services from us or you can find our technology in the products you buy from Cisco or Lucent Technologies or Nortel," Chairman Anthony Caputo said.

Rather than keep people out of a corporate computer system the way Axent does, Information Resource protects that data that are flowing through the system by encryption.

The firm's specialty goes by the buzzwords "virtual private network," or VPN. Such a network uses the Internet -- a wide-open public-transit system -- as if it were a private and internal information line. Hackers may be able to intercept packets of data that are flowing over the Internet, but they won't be able to make heads or tails of the data if they're in code.

Information Resources was started by a pair of encryption engineers from the National Security Agency, home to the world's premiere code breakers and code makers. The company first marketed its products to banks, which wanted encryption protection for the billions of dollars of electronic transactions that take place daily.

Data encryption generally requires complex software and massive amounts of computing power, but four years ago Information Resources began investing in research to create "VPN on a chip."

Already known as the pioneer in VPN technology, Information Resources solidified its leadership position with VPN on a chip, said analyst Matthew Robison of Ferris, Baker Watts. "They are the core technology" that is being built into equipment by most major manufacturers, he said.

Creating VPN on a chip "cost us a lot," Caputo said. "We were not profitable during that time. But now that all the big guys are coming into the security market, we're doing very well."

Sales topped $23 million last year and after 10 consecutive quarters of losses, Information Resource returned to profitability in the fall. The stock has climbed steadily and the firm has had three consecutive profitable quarters while generating sales increases of 20 percent to 50 percent each quarter.

Information Resource is approaching a crucial point in its evolution, Robison said. "They're at the technology adaptation stage," when VPN is becoming the standard method of protecting Internet transactions, he said. "The deployment stage is six months out," he added. That's when everybody starts buying the product.

Caputo said VPN also is beginning another transition -- from a business application to a consumer product. As more consumers use home computers for shopping and banking, they're demanding more security, he said. After signing up all the big Internet equipment makers to offer its encryption chips as an option, Information Resource now is working with cable modem manufacturers to build its code machines into their boxes.

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