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.

May 13, 2011 - Collective Brands, Inc. (PSS-NYSE) primarily engages in the wholesale and retail of footwear and related accessories worldwide. Its Payless ShoeSource stores offer footwear, including athletic, casual and dress shoes, sandals, work and fashion boots, slippers, and accessories, such as handbags, jewelry, and hosiery for women, children, and men. Brands are Airwalk, American Eagle, Champion, Christian Siriano for Payless, Dexter, and Lela Rose for Payless.

It also designs and markets nautical performance, outdoor recreational, dress-casual, and casual footwear for men and women under the Sperry Top-Sider and Sperry brand names; and technical running, athletic lifestyle, outdoor trail shoes, and fashion athletic shoes, as well as athletic apparel under the Saucony and Saucony Originals brand names; and fashion/athletic and casual footwear for adults and children under the Keds, Pro-Keds, and Grasshoppers labels.

As of December 31, 2009, the company operated 4,833 retail stores in 24 countries and territoriesin the U.S. and Canada, the Caribbean, and Central and South America.

Additionally, it engages in the brand development and licensing business, specializing in building, launching, licensing, and growing brands focused on the youth lifestyle market, including Airwalk, Above the Rim, Vision Street Wear, Sims, and Lamar. The company was formerly known as Payless ShoeSource, Inc. and changed its name to Collective Brands, Inc. in August 2007. Collective Brands, Inc. was founded in 1956 and is headquartered in Topeka, Kansas.

The recession took its toll on Collective Brands, forcing it to shutter some of its stores. Sales dropped from $3.442 billion in 2008 to $3.307 billion in 2009. But last year, there was a small improvement, to $3.375 billion. This year, 10 analysts have a consensus estimate of $3.50 billion, then see $3.66 billion next year (fiscal year ends in January).

Reasons for the better numbers include good international growth and much better wholesale sales. But this year's improvement won't be as strong as last year due to higher labor, freight and materials costs. As an example, labor in China is getting scarcer and employees paid more. Management will use labor outside of China to counter these higher wages but that won't help margins until later this year.

With the economy showing some signs of better numbers, the company should be about done shuttering lower performing stores as consumers begin to shoe shop again. Overseas, traffic is picking up. The Performance and Lifestyle division is experiencing increased sales. Down the road, after 2012 closes the books, look for expansion plans to begin again.

All of these elements suggest profits will accelerate within 3 to 5 years. Management announced it looks for earnings growth of 12% to 16% annually with sales increases of 3% to 5% as operating improvements take effect. Some analysts believe that earnings growth rate is a little ambitious. But investors seem to want to believe. The stock is up nicely from the $12.40 price it hit only 6 months ago.

Essential numbers: Trailing P/E is 11.32 and Forward P/E is 9.21. Price to sales ratio is .35. Price to book is 1.43. Book value is $13.99. Profit margin for the last 12 months was 3.34% and Operating margin was 5.88%. Return on equity was 15.15% and Return on assets was 5.45%. There's $324.1 million in cash for $5.27 a share. Total debt is $671.9 million. Debt to equity ratio is 78.64. Current ratio is 2.26. Beta is 1.46. There are 61.52 million shares Outstanding with a Float of 56.29 million. Insiders own 1.13% of the stock. Institutions have 100% of the Float. There is no dividend.

Aggressive investors looking for a growth story should consider PSS. While the company did well during the recession, now that it's over, expansion plans can begin again. Certain costs are rising, but management is getting better operating efficiency to counterbalance those.