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.

September 11, 2008 - VSE Corp. (VSEC-NASDAQ) provides engineering, consulting, systems integration, scientific, and management solutions in the United States and internationally. Its Federal Group provides the U.S. military services and other government agencies with services, including the support of the army's communications and electronics command in managing and executing the rapid response program; lifecycle engineering, logistics, maintenance, and refurbishment services; and training, consulting, and implementation support. This group also offers systems and software engineering, logistics, and prototyping services; obsolescence management, service life extension, and technology insertion programs; and technical documentation and data packages, as well as field maintenance and logistics support services for military vehicles and equipment.

Its Energy and Environmental Group provides consulting and support
services in various aspects of technology research, development, and demonstration that include technology assessment, technical and economic feasibility analysis, technology transfer, R&D program planning, engineering studies, market assessment, strategic resource management, regulatory analysis, environmental compliance, and risk management. Its Infrastructure and Information Technology Group offers technical and management services to the U.S. Government, including IT, advanced vehicle technology, aerospace services, and engineering and transportation infrastructure services. VSE Corporation was founded in1959 and is based in Alexandria, Virginia.

Here's what caught my eye about VSE: sales were $363.7 million in 2006. Last year, they jumped to $653.2 million, an increase of 79.6%. Companies growing that fast are hard to find. Earnings increased almost as much. In 2006, earnings per share were $1.61. Last year, they hit $2.82, up 75%. Since no analysts report as covering this stock, there are no predictions for earnings this year or next. But the first 2 quarters of this fiscal year showed earnings of 71 cents (vs. 57 cents last year) and 94 cents (vs. 71 cents last year). On the sales side, first quarter revenues were $188.7 million (vs $120.7 million) and second quarter showed $251.7 million (vs $159.6 million) The growth is still there.

But will it continue? That's always the question with growth stocks. It's a question more relevant for VSEC with the upcoming election. If John McCain wins, from his initial statements at least, investors can assume he will continue an agressive foreign policy with substantial military force to back it up. If Barack Obama wins, it's harder to guess how it will affect the armed forces and companies that supply them. Speculation would have to be that there will be cut backs in the defense programs, especially since the candidate has stated his desire to withdraw from Iraq. It's one element, the defense budget, that an investor would have to consider strongly before investing in VSEC.

More numbers: Market cap is $186 million with 5.07 million shares outstanding but with a float of only 3.32 million. Insiders own 33.62% of the stock. Price to sales is .23 while Price To Book is 2.85. Profit margin was 1.99% for the last 12 months with an Operating margin of 3.21% in the same time period. Return on equity was 28.8% for the last 12 months.
Total Debt to Equity is .322 with a Current Ratio of 1.098. Book Value per share is $12.80. There is a dividend of 17 cents a share for a yield of .5. That represents 5% of earnings.

VSEC traded at $63 a share last year. It also traded at $16 a share, in the same year. Having tripled in one year, the stock is coming back to earth. Investors with high tolerance for risk will want to dig deeper into this fast growing company. But beware of the upcoming election. The company's fate is closely tied to it.

- Company Web site: www.vsecorp.com

- Ted Allrich