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.

October 2, 2008 - Cracker Barrel Old Country Store, Inc. (CBRL-NASDAQ) primarily engages in the operation and development of the Cracker Barrel Old Country Store restaurant and retail concept in the United States. As of September 22, 2009, it operated 591 full-service restaurants and gift shops in 41 states.

The company was formerly known as CBRL Group, Inc. and changed its name to Cracker Barrel Old Country Store, Inc. in December, 2008. Cracker Barrel Old Country Store, Inc. was founded in 1969 and is headquartered in Lebanon, Tennessee.

Over the last 5 years, CBRL grew sales at an average annual rate of 18% while earnings increased by 6.5%, on average. That relationship is about to change with revenues improving by an average of 3.3% a year and earnings growing by 7.5% a year, on average. Not too impressive until you consider that most companies reported negative sales and earnings over the last year.

Earnings were $2.50 in 2006, then inched to $2.52, followed by $2.79, then to $2.89 (fiscal year ends in July). For 2010, 10 analysts have a consensus estimate of $3.24, then $3.49 in 2011. Next earnings will be out in February for the January quarter with a consesus guess of 89 cents a share, above the 81 cents in the same period last year. Look for 55 cents in the next quarter vs. 52 in the same one this year.

Cracker Barrel dining is a value proposition. The average check is under $9. The company outperforms its competitors with its price/value menu and strong loyalty from its family oriented clientele. Analysts expect continued same-store increases in sales as the recession lingers and consumers tighten their belts, but not so tight that they don't eat out once in a while. More of them will look for better value for their dining dollar which puts them in a booth or seat at Cracker Barrel where food is more affordable. Because most of the menu items are priced well below competitors, don't be surprised if management raises prices a little to improve profitability without losing customers. To further help the bottom line, commodity prices have gone lower.

Here's another positive: demographics. About two thirds of CBRL's customers are over 50. In the next decade, that will be the fastest growing segment of the population as Baby Boomers continue to move toward retirement.

That's all the good news. There's one bit of bad: the stock price rallied sharply from its low point of $10.70, hit late last year. It's up over 200% since then. The stock has been as high as $50.70, touched in early 2007. So valuations were much stronger then when investors had more optimism, before investors lost their enthusiasm. Even with the recent rally, the stock is trading at close to 11 time forward earnings. Over the last 5 years, the average P/E ratio was closer to 15.

More numbers: Price to sales ratio is .36. Price to Book is 5.58. Book value is $6.68. Operating margin for the last 12 months was 6.31% while Profit margin was 3%. Return on Equity for the last 12 months was an extraordinary 55.89%. Current ratio is .83. Beta is .89. There are 22.81 million shares outstanding with a Float of 21.03 million. Insiders own 1.8%. Institutions have 80%. There is an annual dividend of 80 cents for a yield of 2.2%.

Aggressive investors should like this stock, with its solid earnings and strong market position. Spending more time with the financials should be rewarding. But patience may be called for as the stock price seems to reflect much of the good news already.

- Company Web site: www.crackerbarrel.com

- Ted Allrich