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.

September 9, 2011 - Alaska Air Group, Inc., (ALK-NYSE) through its subsidiaries, Alaska Airlines, Inc. and Horizon Air Industries, Inc., operates as an airline company serving mainly destinations in the western United States, Canada, and Mexico. The company provides passenger air services; and freight and mail services primarily to and within the state of Alaska and on the West Coast. Principal cities served include: Fairbanks, Anchorage, Seattle, Portland, Reno, San Francisco, Los Angeles, San Diego, Vladivostok, Guadalajara, Mazatlan, Puerto Vallarta and Mexico City.

In early 2009, the stock tanked in a matter of months from $36.50 to $13.60. Since then, it went almost straight up, finally cresting at $70.61 on July 6, 2011. That's an increase of 419%. When a stock moves that far, that fast, it needs to be approaced with caution. What accounted for the meteoric rise and is there any fuel left for further gains?

While most companies reported lower and lower earnings between 2008 and 2010, ALK wasn't one of them. In 2008, earnings were 18 cents, well below the $2.34 reported in 2007. So the stock got trampled. The following year, earnings jumped to $2.45. But that wasn't the real news. That came in 2009 when earnings took a quantum leap to $7.14 a share. This year, 15 analysts have a consensus estimate of $7.64. For 2012, they see $8.51.

Management sees load factors staying high as future bookings are solid. It's buying more planes and expanding service with more routes to Hawaii and Mexico. By 2014, there will be an additional 15 new aircraft in the air for Alaska. There's also a new agreement with regional provider SkyWest that will increase the number of smaller destinations Alaska can offer as well as feeding more passengers into Alaska's routes. To help earnings further, management is focused on better efficiencies through cost cutting.

In Alaska's latest report, for August, it stated a 7.6% increase in traffic on a 5.4% increase in capacity compared to August 2010. Load factor increased by 1.8 points to increase the load factor to a record 88.3%. It also said that 90.8% of the time, its flights landed on time compared to 88.8% in August of last year. For year to date numbers, revenue passenger miles were up 12.7% compared to 2010.

Essential numbers:
- Price to sales ratio: .49
- Price to book: 1.68
- Operating margin for the last 12 months: 14.01%
- Profit margin for the last 12 months: 7.08%
- Return on equity for the last 12 months: 27.04%
- Return on assets for the last 12 months: 6.94%
- Total cash: $1.15 billion
- Cash per share: $32.04
- Total debt: $1.41 billion
- Total debt to equity: 116.77%
- Current ratio: 1.03
- Book value per share: $33.46
- In the last 52 weeks, the stock is up 24.25%
- There are 36.01 million shares Outstanding
- Float is 35.81 million
- Insiders own .56% and Institutions have 89.5%
- There is no dividend

As you look at the numbers, the amount of debt stands out. Management shares the concern. So far in 2011, it paid down $125 million of borrowings.

ALK is down about 20% from its recent all-time high. With earnings still growing, it may be an opportunity to buy. But keep in mind that airlines can have volatile earnings. ALK tempers some of that volatility by hedging its cost of fuel. But it can't control how passengers feel about flying. Right now, they're buying plenty of tickets. That means ALK should be flying high for some time.