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 11, 2010 - Stage Stores, Inc. (SSI-NYSE) operates as a specialty department store retailer in the United States. It offers brand name and private label apparel, accessories, cosmetics, and footwear, as well as sportswear, dresses, intimates, home and gift products, outerwear, swimwear, and other products for women, men, and children.

Earnings were down in 2008, dropping to minus 9 cents a share after recording $1.24 in 2007. Then in 2009, they went positive, to 75 cents a share. Four analysts think 2010 finished at 93 cents a share (fiscal year ended on January 30). Next year, they see $1.06 a share. The trend looks very positive.

Sales had the same pattern. After reaching $1.545 billion in 2007, they dipped to $1.515 in 2008, then $1.432 billion in 2009. 2010 should finish better, at $1.47 billion. This year, expect $1.53 billion.

Analysts think the November and December months showed a 5% increase in sales over the same 2 months in 2009, going to $453 million. Sames store sales for the year were up 3%. That implies customers are coming back for more.

The company just released more numbers for the fourth quarter: Revenues in January were up 5.1%. Analysts had projected a 3.5% increase in sales. Management raised its fourth quarter and full year earnings outlook above analysts' expectations, saying sales and better gross margin rates were improving. The company now expects fourth quarter earnings to be 84 cents to 85 cents. Prior guidance had been 78 cents to 81 cents. Further, it sees full year earnings at 97 cents to 98 cents vs a previous forecast of 91 cents to 94 cents. Analysts had seen fourth quarter results at 80 cents and full year at 93 cents. The company will report fourth quarter and full year results on March 8.

While expansion is on the horizon, don't expect debt to increase much. Currently, borrowings are only 6% of the capital base or $28 million in long term debt. There's $45.5 million in cash. Part of that is being used to buy back stock which boosts earnings per share.

Essential numbers: Price to sales ratio is .4. Price to book is 1.2. Book value is $13.90. Operating margin for the last 12 months was 4.22%. Profit margin was 2.31%. Return on equity was 7.37% and Return on assets was 4.53%. Total cash per share is $1.24. Debt to equity is .09. Current ratio is 1.87. Beta is 1.73. Over the last 52 weeks the stock is up 33.44%. There are 36.6 million shares outstanding. The Float is 35.96 million. Institutions own 102% of the Float. There is a dividend of 30 cents a year for a yield of 1.8%.

Aggressive investors usually like a turnaround story. It seems they're already aware of most of this one as the recent announcement of better sales and earnings have boosted the stock again. Back in late 2008, the stock traded at $3.50 a share. It's come a long way in a relatively short period of time. But the strength is coming from the right places, and if management continues to expand and deliver as it has in the recent past, look for this stock to continue to reward investors.