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.

April 2, 2010 - American Axle & Manufacturing Holdings (AXL-NYSE) together with its subsidiaries, engages in the manufacture, engineering, design, and validation of driveline and drivetrain systems, and related components and chassis modules for the automotive industry in the United States.

American Axle hit some deep potholes. It underwent a large restructuring and downsizing of the North American operations. Earnings were negative in 2008 (minus $4.63), then again in 2009 (minus $2.45). Much of the problem had to do with U.S. auto output. The company makes profits when total manufacturing exceeds 10 million vehicles. For years, total numbers were close to 15 million. No problems. But we all know what happened in 2008 and 2009. The stock hit an all-time low of 30 cents in early 2009 as investors gave up on it.

But things are changing for the better. Analysts see a turnaround in earnings this year. Consensus from 8 analysts is for 75 cents in 2010 vs negative $2.15 in 2009, then $1.15 in 2011. The first quarter numbers should be revealing. The consensus is for 20 cents a share, well above the negative 37 cents in the first quarter of last year. Second quarter should show 22 cents, way above the negative $1.74 of last year's second period.

Two things helped AXL get back on track. First was a contribution from GM to keep the company going. The second was a $110 million equity offering last fall. That put the company's balance sheet in much better shape. There is no large debt due within the next 3 years but there is considerable debt ($1.07 billion).

Analysts see U.S. auto sales hitting 12 million this year. The upward trend started in the last quarter of 2009 when revenues were up 13% compared to the third quarter. Profits turned positive again in the last quarter as well, thanks to higher sales and a more efficient cost structure. There's an additional $300 million in sales expected from new parts programs this year. Analysts think revenues will increase by 41% this year to $2.15 billion. Then add another 11.7% to $2.40 billion next year.

This has been a volatile stock, riding the economic roller coaster. After reaching $31 a share in 2007, it was almost a complete free fall to 30 cents a share by early 2009. Since then the upward movement has been dramatic. In the last 12 months, the stock is up 711%.

More numbers: Officers and directors own 11.20% of the stock. Institutions own 83%. There are 71.57 million shares outstanding with a Float of 62.73 million. Price to Sales ratio is .47. Price to Book ratio is N/A as book value is negative (-$8.20). There's a $182.30 million in cash for $2.55 a share. Current ratio is 1.16. Beta is a heart stopping 2.75 (hence the interest it should have to Aggressive investors). There is no dividend.

Aggressive investors will like this story if they believe the U.S. auto industry is about to revive. This is one way to participate in the recovery without owning the autos and getting in at the assembly level, rather than the final sales.

- Company Web site: www.aam.com

 Ted Allrich