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.

June 26, 2009 - Computer Program and Systems, Inc. (CPSI-NASDAQ) a healthcare information technology company, designs, develops, markets, installs, and supports computerized information technology systems to meet the demands of small and midsize hospitals in the United States.

The company's software applications comprise patient management, financial accounting, clinical, patient care, and enterprise applications. Its services include support and maintenance; business management services consisting of electronic billing, statement processing, business accounts receivable management, payroll processing, contract management, and insurance services; and system implementation and training comprising conversion services.

It serves acute care community hospitals, as well as small specialty hospitals that focus on various medical areas, such as surgery, rehabilitation, and psychiatry. The company was founded in 1979 and is headquartered in Mobile, Alabama.

In the interim, the reality is a little grim. Sales in the first quarter were up only 2%. Hospitals aren't spening as much currently, just like every other business or person. With lower demand for cosmetic surgery or stricter credit markets, there are numerous reasons for hospitals to show restraint for now and the near future.

Earnings this year, as reflected in a consensus of 9 analysts, are predicted at $1.54, up from $1.43 last year. Next year, look for $1.78. In the first quarter, they were 37 cents a share, up from 33 cents in the same period last year. For the second quarter, the consensus is for 39 cents, up only slightly from 38 cents in the same period of 2008.

The good news about the stimulus program is most likely already in the stock. The price has more than doubled in a year, going from a low of $17.10 in 2008 to its current quote of $38. The all-time high for the stock was set in 2006 when it touched $50.90 but then went into a downward slide that ended last year at the above mentioned low.

Other numbers: Price to Sales is 3.46 while Price to Book is 9.83. Operating margin was 20.37 for the last 12 months while Profit margin was 13.27. Return on Equity was an astounding 39.68%. There's $24.21 million in cash that makes $2.21 per share. There is no debt. Current ratio is 4.09. Book Value per share is $3.86. There are 10.96 million shares outstanding with a float of 10.06. Insiders own 7.47% of the stock. Institutions have 89.6%. There is no dividend.

The numbers that stand out: Return on Equity at almost 40%. That's extraordinary and not unusual for CPSI. They've delivered that return for many years. The fact that there is no debt is also noteworthy. However, on the valuation side, a P/E of 21 is rather high as well as a very high Price to Book.

Investors like this stock, maybe even love it. They're expecting great things to happen once the stimulus spending starts. But if that bill is delayed or the economy stays weak, don't expect the stock price to continue to run higher. In fact, if CPSI is of interest, it's the kind of stock that deserves more investigation and if attractive, should be watched for a better entry point.

Company Web site: www.cpsinet.com

- Ted Allrich