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.

August 21, 2009 - Aircastle Limited (AYR-NYSE) through its subsidiaries, engages in the acquisition, lease, and sale of high-utility commercial jet aircraft to passenger and cargo airlines worldwide. It also makes investments in various aviation assets, including debt investments secured by commercial jet aircraft.

Tough time to be in the airplane business. Yet the company delivered 35 cents in profits for the second quarter ended in June, below the 45 cents of last year's second period, but still ahead of the 23 cents in the first quarter. Analysts see the full year number at $1.22, (last year it was $1.48), then in 2010, going to $1.32. But if the global economy starts picking up, expect both numbers to increase.

Here's what CEO Ron Wainshal said about the second quarter, "Aircastle turned in another successful quarter, with utilization coming in at 98%, all of our aircraft being on lease and with the completion of our first new aircraft acquisition in over a year. However, we expect the lease market to remain challenging through the winter. We believe Aircastle's capital structure and servicing strengths will continue to serve us well not only in managing our existing portfolio but in sourcing new business. In fact, we believe the current market turmoil is now presenting some new and exciting growth opportunities for the company."

That capital structure includes a relatively large amount of debt, about $2.56 billion or 67% of the balance sheet. Of course, most of this has the jets as collateral so it's not just general corporate borrowing. As long as the jets fly, the debt is no problem. The company has $96 million in cash.

Revenues were a little light in the second quarter as some jets sat on the runways going through conversions to freight haulers. Passenger travel was also down in the quarter making it difficult to place aircraft that have come off leases. Even with those challenges, the company did have a utilization rate of 98% for aircraft that were leased.

Profits were impaired by higher maintenance costs which included conversions of some aircraft, many of which were taken back by the company when customers defaulted on their leases. Expect the rest of the year to show a few more defaults and more challenges. The company has more planes coming off leases by December. Whether those renew or not is not yet known.

The company currently has 4 737-400 planes being coverted for freight purposes. By the end of August, the first will be in service. With the global economy still weak, placing aircraft has been the biggest challenge. The bright spot is that any planes still in service have very high utilization rates. Furthermore, airplane manufacturers have been trimming their production lines which bodes well for AYR for any increase in demand for planes.

Other numbers: Price to sales is 1.38 while Price to book is .65. Operating margin for the last 12 months was 53.05% while Profit margin was 16.31. Return on equity was 7.41%. Total revenues in 2008 were $583 million. Total cash per share is $1.21. Current ratio is 2.63. Book value per share is 15.54. Beta is a heart stopping 2.37. The high for the last 52 weeks was $13.90, the low, $2.54. There 79.23 million shares outstanding. Insiders own 16.07%.

Aggressive investors should like this one: there's quite a bit of leverage; there's a good dividend; growth prospects are very positive and if the global economy improves, the forecasted numbers will only go up. But if passenger traffic slows, things could go south quickly. That doesn't seem to be too strong of a possibility at the moment but needs to be watched by any investor willing to buckle up and buy this volatile stock.

- Company Web site: www.aircastle.com

 Ted Allrich