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.

March 3, 2010 - Align Technology, inc. (ALGN-NASDAQ) designs, manufactures, and markets the invisalign system for treating malocclusion or the misalignment of teeth. Invisalign corrects malocclusion with a series of clear, nearly invisible, removable appliances that gently move teeth to a desired final position.

It also offers ancillary products comprising cleaning material and adjusting tools for dental professionals. AlignTechnology, Inc. distributes products directly to orthodontists and general practitioner dentists in North America, Europe, AsiaPacific, Latin America, and Japan. The company was founded in 1997 and is headquartered in Santa Clara, California.

Here's the first thing you notice about ALGN's price chart: it looks like a roller coaster, going from $19.40 in 2001 when it went public to $1.30 in 2002, then rocketing to $22.80 by 2004, swooshing back down to $5.60 in 2005. By 2007, it reached a new high of $29.70 only to head south rapidly, reaching a bottom of $4.90 in 2008. Since then, it's been moving north again. Like any good roller coaster ride, you'll need your seat belt tightly fastened if you decide to own this stock.

As you might guess, earnings follow the same pattern: up and down. Starting with a deficit of $2.57 in 2001, earnings finally went positive in 2004 at 14 cents a share only to decrease to 2 cents the following year. In 2006, they were negative again, finishing at minus 40 cents a share. But 2007 saw a swing to the positive with 50 cents a share. 2008 showed still positive numbers but lower at 31 cents a share. 2009 ended with 41 cents. For 2010, consensus from 10 analysts is for 56 cents a share, with a range of 46 cents to 61 cents, and in 2011, they forecast 71 cents a share with a range of 61 cents to 80 cents. It looks like the earnings roller coaster has come to an end.

Align had a good 2009. Revenues were up 17%. Case volume was a record of 61,000 in the last quarter. Case shipments improved by 16% vs the previous year and up 8% compared to the previous quarter. Cost cutting showed up in margins, both gross and operating. Earnings per share were up over 100%, 16 cents vs 7 cents.

It could be dramatic. Analysts believe the company will have a hard time recruiting and training new dentists going forward. Recent history exemplifies the problem. The number of general practicioners went from 1360 a year ago to 410 trained in the most recent period. Furthermore, the company eliminated 9600 dentists who never did a case, and another 13,400 are gone because they didn't complete either one case or CE in 2009. In addition, of the 22,200 active dentists, 15,800 still need to meet the June extension requirements. The second half of 2010 could be a real challenge for the company.

More numbers: Price to sales ratio is 4.47. Price to book is 5.11. Book value is $3.67. Operating margin for the last 12 months was 11.84%. Total cash is $186.46 million or $2.50 a share. There is no debt. Current ratio is 3.22. Beta is an extreme 2.1. 52-week low was on March 6, 2009 at $6.10 a share. 52- week high was on January 28, 2010 at $19.25. There are 74.48 million shares outstanding with a Float of 65.94 million. Insiders own 22.36% of the stock. Institutions have 73.70%. There is no dividend.

Aggressive investors will find this stock of interest. There's plenty of volatility, a good story, and enough unknown (what will happen after June?) to make it intriguing. The potential for higher earnings will depend on how strong the Proficiency Program concludes. The company may extend it again. Only time will reveal the outcome. In the interim, earnings are rising, cash is building, and margins are widening. That's a strong combination suggesting management is doing its job.

- Company Web site: www.aligntech.com

 Ted Allrich