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 - Cross (A.T.) Co. (ATX-NASDAQ) engages in designing, manufacturing, and marketing personal accessories in the United States. The company operates in two segments, Cross Accessory Division (COD) and Cross Optical Group (COG). The COD segment offers writing instruments consisting of ball-point pens, fountain pens, selectip rolling ball pens, and mechanical pencils, as well as refills for its products. This segment also provides various personal and business accessories, including leather goods, reading glasses, watches, desk sets, business totes, cufflinks, and stationery. It sells writing instrument products under the Cross brand, as well as under the Penatia and Omni by Cross brands, and the licensed name Bill Blass. Products are sold through direct sales force and manufacturers' agents or representatives to retail and wholesale accounts, as well as directly to consumers through its Website cross.com and the Cross retail stores.

When a company almost doubles earnings in one year, it deserves some attention. Cross reported 22 cents a share in 2006, then showed 43 cents in 2007. This year, it's on track to deliver 49 cents a share, if the last 2 quarters perform as analysts predict. Next year, expect 67 cents a share. In 2005, earnings per share were 3 cents for the whole year. Clearly something good is going on here.

Part of the good news comes from the sunglass division, Costa del Mar. Sales have been climbing steadily for some time for the stylish optical maker. But more fundamental reasons such as better cash flow, paydown of debt, and tigher cost controls contribute to the better numbers.

There's only 1 analyst following the company so there isn't a consensus to rely on for predictions, just one person's opinion. Revenues were $151.9 million last year. The analyst sees $167.8 million this year and $186.6 million next year. Of course, these numbers were probably generated several weeks ago, before the large unemployment claims were released. Even factoring in the extraordinary claims due to the hurricanes, lost jobs are increasing. When people are out of jobs, they don't usually spend too much on pure luxuries. And that's what Cross sells.

And there's the rub. With the economy's brakes jammed on, the forecasts for earnings and revenues have to be viewed with some scepticism. Investors are obviously already doing that. The stock has gone from a high of $12.82 last year to a low of $5.30 early in the year, then rallied to $10.05 by the middle of this year, only to fall back to its current level of $6.25. Clearly, investors see Cross suffering from consumers' reluctance to spend, particularly on anything but essential items. While there is always a certain percentage (small) of the population able to withstand any economic crisis, most people won't be looking for something special this Christmas, a time when Cross makes almost 50% of its earnings.

Cross has come back from the days of closing retail stores and slowing sales. It's added a new product line, decreased its debt and made significant operational improvements. But it can't overcome a lack of demand, no matter how nice or well-made its products are (and they are certainly those things and more). So the stock will most likely see continued selling as more bad news comes out about the economy.

However, once the news turns positive, look for Cross to participate in any upward move in the stock market. And when consumers are feeling safer, expect Cross to once again show impressive earnings results.

More numbers: Price to sales is .63 while Price to Book is 1.19. Profit margin for the last 12 months was 4.98% with Operating margin at 7.13%. Return on equity was 10%. Total cash per share in the most recent quarter was 91 cents (on a stock selling for $6.25 as of this writing). Total Debt to Equity is .25 and the Current Ratio is 3.6. Book Value per share is $5.42. There is no dividend. Insiders own 45% of the stock while institutions have 43%. There are no shares short as of this writing.

- Company Web site: www.cross.com

- Ted Allrich