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.

February 18, 2010 - Consolidated Graphics, Inc. (CGX-NYSE) together with its subsidiaries, provides general commercial printing and print-related services primarily in the United States and Canada. The company offers commercial printing and print-related services comprising traditional print services, such as electronic prepress, digital and offset printing, finishing, storage, and delivery of printed documents, which are manufactured to a customer's design specifications.

The company prints multi-color marketing materials, product and capability brochures, point-of-purchase displays, direct mail pieces, shareholder communications, trading cards, catalogs, and training manuals. It also offers e-commerce and electronic media services, including Internet services, such as designing Web sites and programming interactive tools, CD-ROM development and production, foreign language translation services, composition and typesetting, and database management for customer-retention programs, as well as e-commerce software solutions.

Customers include national and local corporations operating in a range of industries, as well as mutual fund companies, advertising agencies, graphic design firms, catalog retailers, direct mail marketers, state and local governments and quasi-governmental agencies, education institutions, not-for-profit associations, and political campaign organizations. Consolidated Graphics, Inc. was founded in 1985 and is headquartered in Houston, Texas.

This is the largest sheetfed and digital commercial printer in the U.S. with 70 printing locations in 13 fulfillment centers in 27 states and Canada. Revenues for 2010 most likely finished at $1.05 billion, an increase of 5.6% over 2009's sales. This year expect $1.08 billion. Sales for the last 5 years, increased on average, 12.5% annually. That includes a dip in 2009 to $990.9 milion, down from $1.145 billion in 2008.

Earnings increased from 2001 to 2007, going from $1.25 to $4.31, but they dropped significantly in 2008 to $2.97. That sent the stock from $61.60 to $10.10 before the selling stopped. Since early 2009, the stock marched ever higher, moving up over 400%. For 2010, (fiscal year ends March 31), look for earnings per share of $3.33, well above the $1.96 of 2009. For 2011, expect $3.86.

The economic recovery accounts for the better numbers. Businesses are spending more on advertising. The fall elections also increased sales with plenty of ads for every cause and politician. Further boosting came from 2 new acquisitions and more orders for digitally customizable printed products.

Those 2 recent acquisitions were certain divisions of Hickory Printing Group in North Carolina and The Jackson Group in Indiana. Expect more purchases as the management looks to buy distressed printers. The company has been a strong consolidator in the industry, bringing efficiencies and resources to smaller businesses.

The board just authorized a buyback program, up to $50 million worth of stock. If fully implemented, that would be about 1 million shares at these levels or about 9% of the stock. With a growth plan of acquisitions and a share repurchase program, future earnings should grow noticably.

Essential numbers: Trailing P/E is 19. Price to sales ratio is .59. Price to book is 2.03. Book value is $26.56. Profit margin for the last 12 months was 3.23%. Operating margin was 6.15%. Return on equity was 11.80%. Return on assets was 5.43%. Total cash is $5.53 million or 49 cents a share. Total debt is $191 million. Debt to equity is .63. Current ratio is 1.45. Beta is 1.92. In the last 52 weeks, the stock is up 25.82%. There are 11.30 million shares outstanding with a Float of 9.80 million. Insiders own 11.74% of the stock and Institutions have 83.30% of the Float. There is no dividend.

For aggressive investors, CGX is worth some time. There has been volatility in earnings here, especially with the economic slowdown. But now that that seems to be done, business should continue to pick up with more advertising orders. Also, new acquisitions should add quickly to the bottom line as efficiencies in admin costs and supplies happen fast for a new add on.