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.

August 7, 2009 - Chiquita Brands International, Inc. (CQB-NYSE) and its subsidiaries engage in the distribution and marketing of bananas and fresh produce under the Chiquita and other brand names worldwide. The company operates in three segments: Bananas, Salads and Healthy Snacks, and Other Produce.

The Salads and Healthy Snacks segment offers value-added salads under the Fresh Express and other labels; and fresh vegetable and fruit ingredients used in food service, healthy snacks, and processed fruit ingredient products. This segment also provides fresh-cut products, such as lettuce, tomatoes, spinach, cabbage, broccoli, cauliflower, onions, and peppers to foodservice distributorswho resell these products to foodservice operators. It distributes Fresh Express branded products to food retailers, foodservice distributors and operators, and quick-service restaurants; and fresh produce foodservice offerings primarily to third-party distributors for resale principally to quick-service restaurants in the United States.

The Other Produce segment engages in sourcing, marketing, and distributing fresh fruits and vegetables other than bananas primarily in Germany and Austria. It offers grapes, pineapples, melons, stonefruit, apples, kiwi, and tomatoes. The company was founded in 1899 and is headquartered in Cincinnati, Ohio.

If you look at the stock price graph for CQB from the early part of 2008 until eary 2009, it hurts. Reaching a high of $25.80, the stock didn't stop falling until it hit $4.30. Of course, that was better than the 2001 low of 40 cents a share when the company was operating under a bankruptcy filing, then emerged on March 19, 2002 when new stock was issued. Since the reorganization, the price has gotten as high as $31.10 and as low as $4.30.

The reason for the volatility? Earnings. They're as erratic as you can find. In 2002, they were negative, at minus $1.37. Then in 2003, they zoomed to a positive $1.77, faded a little to $1.44, then more than doubled to $2.92, only to come crashing down, showing a loss in 2006 of $1.69. 2007 came in a little better but still at a loss of $1.22. Last year things went positive again with 97 cents a share. This year, the consensus of 3 analysts is for earnings of $1.11 and $1.56 in 2010. If those numbers prove correct, this stock should do better. But remember the history here.

Here's a good example of why earnings (and sales) can be so volatile. In 2008, 57% of sales came from bananas. In the first quarter of this year, there was a flood in Panama and Cost Rica doing lots of damage to bananas which added $17 million to expenses. No one can predict the weather. Or currency rates. Due to lower euro exchange rates and pricing, there was an 8% decline in sales in bananas, but thanks to higher prices in North America, the flood and rates were not very harmful.

Investors like what they see in the salads and healthy snacks division (36% of 2008 sales). The division produced operating income that more than tripled in the first quarter of this year. Management cut fixed costs in the group and integrated its salad plant. It also eliminated 150 low-profit and unprofitable products, simplified production and cut some overhead expenses.

New products are on the shelves, ones like Gourmet Cafe single serve salads and Pineapple Bites, another offering from the Fruit Bites collection. Some newer introductions in Europe are doing well, such as Just Fruit in a Bottle. The smoothie line for Europe is increasing sales. Now the company is taking the smoothie to other countries. Analysts think the smoothie lines in countries outside Europe will reach breakeven within 3 years.

The company has been cleaning up its balance sheet by reducing long-term debt with excess cash. Though still somewhat high at 55% of capital, debt has been cut, meaning lower interest payments and better profits. Total debt is $743 million.

The stock recently received an upgrade to "Buy" by Jefferies & Co. and on Monday of this week (August 3), Zacks put it on its #1 Rank list.

More numbers: Price to sales is .16. Price to Book is .99. Operating margin for the last 12 motnhs was 1.91% while Profit margin was negative 9.43%. Return on equity was a negative 45%. There's $78.02 million in cash, making $1.75 a share in cash. Current ratio is 1.74. Book value per share is $12.36. The stock carries a very high Beta of 2.1. The 52-week range for the stock has been $4.32 to $17.61. There are 44.54 million shares outstanding with insiders owning 1.68%.

Aggressive investors will find this stock of interest because it has the potential to move quickly to the upside. With a beta of greater than 2, it moves twice as much as the S&P 500, up or down. While weather and currency exchange rates can affect the bottom line unexpectedly, it appears management is controlling costs and producing results with the areas it can manage. If it can keep profits positive and growing (and analsyts like Janney Montgomery's Jonathan Feeney does....he put out a Buy recommendation at the end of June), the stock should continue its recent climb.

Company Web site: www.chiquita.com

- Ted Allrich