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 19, 2010 - Valassis Communications Inc. (VCI-NYSE) and its subsidiaries provide various media and marketing services in the United States and internationally. It operates in four segments: Shared Mail, Neighborhood Targeted, Free-standing Inserts, and International, Digital Media, and Services.

The Neighborhood Targeted segment provides customers with print and media placement of free-standing solo insert formats, as well as specialty print promotion products in various customized formats. It also offers newspaper-delivered or direct-to-door sampling products; door hangers; newspaper polybag advertising; and provides brokering of advertising printed directly on pages of newspapers.

The Free-standing Inserts segment offers promotional booklets containing coupons of multiple advertisers that are distributed to approximately 60 million households through newspapers and shared mail. It also provides customized free-standing inserts featuring multiple brands of a single client.

The International, Digital Media, and Services segment provides coupon clearing, promotion information management products, and marketing services. It also provides promotion security and consulting services, including the execution of sweepstakes and contests; produces direct-mail programs based on multiple data sources, including frequent shopper card data; and offers proprietary software solutions for customers to manage and analyze frequent shopper data. The company was founded in 1970 and is headquartered in Livonia, Michigan.

In the latter part of 2008, the stock traded at $1 a share. By March of 2009, it rallied to $1.14. And then it took off, jumped to its current level of $26.50, barely stopping for a breather. Can it keep going? And what changed everybody's mind, taking this stock from a total loser to an Olympic gold medal?

In July of last year, a Michigan jury gave Valassis $300 million for anticompetitive practices by a News Corp. subsidiary. Only last week did the two companies come to an agreement that settled all disputes between them, giving VCI a settlement of $500 million. Furthermore, the competitors agreed to a 10 year shared mail distribution agreement. Analysts are not including this payment in their earnings estimates. They believe the after tax benefit to the company will be $300 million.

That cash will come in handy. Debt is 96% of capital. (How's that for aggressive management?) With addditional money, the company can repay some of that debt or buy another firm.

Another benefit of the settlement with News: profits will get a lift. News's tough, blocking tactics in the free-standing insert ads hurt VCI's profits in the last few years. Now with the new agreement, those profits should return.

VCI is all about coupons. With the economy still disabled, consumers are looking for ways to save money. Coupons are one. Last year, they used more coupons than when times were good, and as long as unemployment stays high, coupons will help many families buy the goods they need. That behavior may change when more jobs are created but most likely not significantly. Once a consumer gets the benefits of a coupon, it's hard to go back to paying full price for an item.

More numbers: Price to sales is .56. Price to book is 20. Book value is $1.32. Operating margin for the last 12 months was 7.09% while Profit margin was a negative 7.82%. Return on equity was -116.2%. Total cash is $111 million or $2.30 a share. Total debt is $1.08 billion. Current ratio is 1.353. Beta is off the charts: 4.36. There are 48.16 million shares outstanding with a Float of 47.16 million. Insiders own 11.37%. Institutions have 77.30%. There is no dividend.

This is a highly leveraged company that seems to be back on track. Management has cut costs dramatically. Earnings are rebounding. The News Corp. settlement gives the company new cash and a better business environment going forward. Just remember, the stock was trading at $1 only one year ago.

- Company Web site: www.valassis.com

- Ted Allrich