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.

October 15, 2009 - Amkor Technology (AMKR-NASDAQ) operates as a subcontractor of semiconductor packaging and test services in the United States and internationally. It provides packaging solutions, including leadframe and laminate packages using wire bond and flip chip formats.

It also has a line of advanced probe and final test services for analog, digital, logic, mixed signal, and radio frequency semiconductor devices. Two of its largest customers are Intel and Toshiba. U.S. sales are about 36% of net revenues. The company was founded in 1968 and is headquartered in Chandler, Arizona.

What strikes you about this company is the stock's volatile price. Look at a chart from 1999 to present, and it mimics a very scary roller coaster, one with very high highs and quick, sharp descents. So be warned on this one: it's not for the faint of heart.

Being in the semiconductor business means high volatility. The cycles for business come fast and hit hard. When an upcycle is over, it's over. A semiconductor stock will hit the wall and go straight down. The latest example of that for AMKR was in the middle of last year when it traded at $12.70 a share. By the end of the year, it was changing hands at $1.30. Since then, with the exception of the March debacle, the stock has gone almost straight up, reaching $7.60. It's off a little from that now. Can it get back to its old high of $65.30, reached in 2000? Probably not, but it could move above the current levels.

Not that earnings this year will be the catalyst. You'll have to look toward next year for earnings help. This year, 3 analysts have a consensus number of 21 cents a share, well below the $1.10 made last year. But the range for the 3 analysts goes from 16 cents to 24 cents. For 2010, they see 45 cents a share with a range of 10 cents to 70 cents. So it's not just the stock price that's all over the place. Next earnings announcement will be on October 27 for third quarter results. Look for 19 cents a share, down from 40 cents last year in the third. For the fourth quarter, expect 16 cents, higher than the 6 cents made in 2008 in the fourth. Again, high volatility in the earnings which always leads to high volatility in the stock price.

The company says there's an increase in demand for semiconductor assembly. Sales were up 30% in the second quarter over the first quarter. Analysts think the third quarter will show another double digit improvement over the second quarter. Gross margins are widening, going from 12% to 20% which explains the positive 5 cents a share in the second quarter compared to the loss of 12 cents in the same period last year. Amkor's plant capacity utilization went to 66%, up from 45%, in the second quarter with a 43% increase in packaged untis processed.

Where there will be pain is in total revenues. Decreased demand for outsourced semiconductor assemby and test services has analysts looking for sales to decrease by 21.4% this year to $2.09 billion. When sales drop that sharply, profits must follow. However, analysts see 2010 with an increase of revenues by 14.4% to $2.39 billion based on a global economic recovery in general and an upturn in the semiconductor cycle in particular.

More numbers: Price to sales is .64. Price to book is 6.35. Book value is $1.20. There's $455.29 million in cash which makes $2.48 a share. Total debt is $1.55 billion. Current ratio is 2.02. Beta on the stock is a whopping 2.67. The 52-week low was on November 8, 2008, at $1.33. The 52-week high was on October 13, 2009, at $7.70. There are 183.05 million shares outstanding with a float of 102.56 million. Insiders own 40.58% of the stock, institutions 52.10%. There is no dividend.

Aggressive investors look for stocks with high betas. It means the stock moves quickly (up and down), giving them an opportunity to move in and out of a stock. AMKR has definitely shown it can move. It seems to be on the way up again, but can sustain it only if the cyclical semiconductor industry has in fact started an up cycle. If not, be prepared for some sharp dips. But if the cycle has started and heads higher, AMKR will be very rewarding to those investors with an appetite for risk.

- Company Web site: www.amkor.com

 Ted Allrich