This column is for investors willing to take more risk and potentially receive more reward.  The stocks mentioned in this column are not recommended to buy or sell.  They're brought to your attention so you can investigate them further to determine if they fit your risk profile.  Most of the stocks will have less than $1 billion of market capitalization, have more volatility than other stocks, and oftentimes no earnings.  And some will have tremendous stories.

March 12, 2009 - Alaska Air Group, Inc. (ALK-NYSE) through its subsidiaries, Alaska Airlines, Inc. and Horizon Air Industries, Inc., operates as an airline company serving destinations in the western United States, Canada, and Mexico. It provides passengerair services; and freight and mail services primarily to and within the state of Alaska and on the West Coast. In 2007, passenger traffic was 92% of revenues, freight and mail 3%, other 5%.

The airlines serves major cities such as Fairbanks, Anchorage, Seattle, Portland, Reno, San Francisco, Los Angeles, San Diego, Vladivostok, Guadalajara, Mazitlan, Puerto Vallarta, and Mexico City as well as smaller ones like Bozeman, Burbank, Cancun and many others.

Higher fuel costs hurt ALK's earnings in 2008, taking them down to 12 cents a share. In 2007, the company reported $2.34. But that was down from $3.43 in 2006. Analysts see a much better 2009, predicting $2.86, then $3.32 in 2010.

The turnaround reflects management's attention to the problems. It's matching supply and demand better by reducing and redeploying capacity. Fares are going up, so are ancillary fees, and it's saving fuel by fleet transition and operational improvements. These actions, along with much lower fuel costs, should bring back better profits, even with lower head counts on most flights as the economy continues to struggle. To further help profitability, look for more layoffs in the near future if the seats don't start filling up soon.

Of course, once the economy starts to recover, oil prices will most likely go up again. How high is unknown, but it would be naive to assume fuel costs would stay at these levels if everything else is headed higher.

More numbers: Forward P/E is 4. Price to sales ratio is .62. Price to Book is .87. Return on Equity was negative for the last 12 months:
-16.11%. Analysts see it going to 15% this year and 15% next year. Reevnues was $3.66 billion for the last 12 months. Total cash is $1.08 billion. Cash per share is $29.68. Total debt is $1.84 billion. Current ratio is 1.11. Book Value per share is $18.25. Beta for the last 12 months was a very low .3. There are 36.3 million shares outstanding. Insiders own .62%. Institutions have 88.4%. There is no dividend.

Check into ALK if you're interested in a turnaround play. The story here is a good one. If the economy bounces back sooner rather than later, expect this stock to reflect that.

Company Web site: www.alaskaair.com

 Ted Allrich