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.

January 15, 2009 - Greatbatch, Inc. (GB-NYSE) together with its subsidiaries, engages in the development and manufacture of batteries and other components. The company operates in two segments, Implantable Medical Components (IMC) and Electrochem Commercial Power (ECP).

The ECP segment offers electrochemical cells, battery packs, and wireless sensors for applications, such as oil and gas exploration, pipeline inspection, military, telematics, asset tracking, oceanography equipment, external medical, seismic surveying,and aerospace applications. It also provides rechargeable battery and wireless sensor systems. Greatbatch markets batteries and battery packs to the end user; manufacturers, who incorporate its products into other devices for resale; and distributors. It offers its products in the United States and internationally. The company was founded in 1970 and is based in Clarence, New York.

In the most recent quarter (ended September), sales were up 72% from the same quarter last year. Earnings jumped by 69%. The reason? Better demand for existing products and new acquisitions since last year, in fact 7 of them. With an economy that's tanking, it's hard to find growth like this.

While incorporating these new companies has been a burden to the bottom line, look for some synergies to emerge as overlapping departments merge and certain redundancies are eliminated. That and cuts in spending in research and development as well as SG&A (selling, general and administrative) expenses and closing of some facilities should make profit margins expand noticeably going forward.

Earnings have been erratic over the last six years with the stock reflecting the down times. In 2003, earnings per share were $1.13, followed by 84 cents. Then they went to 46 cents, only to bounce to $1.17, then $1.46. For all of 2008, analysts think the year closed at $1.27 and predict $1.69 for next year. For the fourth quarter, estimates are for 36 cents a share, up from 21 cents in the fourth quarter last year. In the first quarter of this year, look for 35 cents, up from 16 cents in the same quarter last year. Analysts predict earnings will grow by 13% a year, on average, over the next 5 years.

Revenues have been more straightforward, growing steadily since 2005 when the company brought in $241.1 million. Then they sold $271.1 million worth of products in 2006, followed by $318.7 million. For 2008, analysts estimate total sales will end at $531.8 million and forecast 2009 at $577.05 million.

The stock dipped to $15.50 last year after being as high as $35.00 in 2007. It bounced back to $27 late last year and now trades at $21. In its favor, while the latter part of 2008 saw most stocks crashing, GB kept moving higher, although not in a straight line.

More numbers: Price to sales is 1.04. Price to book is 1.46. For the last 12 months, Return on Equity was 3.88. Profit margin was 2.65%. There's $20.1 million in cash on the books. Total debt is $352.32 million. Total debt to equity is 1.027. Current ratio is 2.45. Book Value is $14.98. There are 22.91 million shares outstanding. Insiders own 5.64%. Institutions own most of the shares in the float. There is no dividend.

GB is a small company, doing well in spite of the bad economy. With new products and acquisitions, it's offering products that are in high demand. Expect more new products and acquisitions going forward as well as penetration into new markets. While it's been immune so far from a bad economy, be aware that it's hard to do well when everyone else isn't.

- Company Web site: www.greatbatch.com

- Ted Allrich