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.

January 8, 2010 - Greif, Inc. (GEF-NYSE) engages in the manufacture and sale of industrial packaging products, and containerboard and corrugated products worldwide. It operates in three segments: Industrial Packaging, Paper Packaging, and Land Management.

The Paper Packaging segment sells containerboards, corrugated sheets, and other corrugated products and multiwall bags to customers in North America. Its corrugated container products are used to ship various products, such as home appliances, small machinery, grocery products, building products, automotive components, books, and furniture. Industrial and consumer multiwall bag products are used to ship a range of industrial and consumer products, such as seeds, fertilizers, chemicals, concrete, flour, sugar, feed, pet foods, popcorn, charcoal,and salt. This segment serves packaging, automotive, food, building products, agricultural, and chemical industries.

The Land Management segment involves harvesting and regenerating its timber properties in the United States and Canada. As of October 31, 2009, Greif, Inc. owned approximately 256,700 acres of timber properties in the southeastern United States and approximately 25,050 acres of timber properties in Canada. The company was formerly known as Greif Bros. Corporation and changed its name to Greif, Inc. in 2001. Greif, Inc. was founded in 1877 and is headquartered in Delaware, Ohio.

Here's what caught my eye: Greif is likely to post record earnings in 2010. Any company that can do that in this economy deserves a look. The consensus from 5 analysts is for $4.06 which isn't a record (that was in 2008 when they were $4.18). But the range is from a low estimate of $3.10 to $4.50 with 2 analysts showing $4.30 and $4.50. Either would be a record. Next year, 3 analysts see $4.90, another record, and the range is $4.60 to $5.11. Clearly, Greif is doing a lot of things right.

Earnings were helped by the Land Management division in the fiscal fourth quarter (ends October 31, 2009), generated by land sales. While the quarter also showed lower selling prices for industrial packaging and unit volume was down 10% year to year, the good news was that compared to the third quarter, volume was up 6%. If the global economy continues to gain traction, look for that trend to continue. Another positive: foreign exchange rates, with the dollar's weakness, should add about $10 million to operating income this year.

On the negative side: higher depreciation and interest costs plus Chinese demand for recycle fiber. The latter means higher expenses for raw materials in the Paper Packaging group. To counteract this, the entire industry is trying to raise prices on containerboard.

Last year, the company saved $50 million through operational and commercial improvements as well as global sourcing programs. Other cost cutting measures were also put into effect, and management achieved its stated goal of saving $150 million annually. Expect $120 million of it to be permanent due to the closing of 19 plants and the loss of 2100 jobs.

Greif has been busy buying other companies. In fiscal 2009 alone, it purchased 5 industrial packaging firms and one paper business. All should add to earnings in 2010. Another deal closed shortly after the fiscal year ended, and there are 7 more being considered. It's the mark of aggressive management when they see opportunities amidst all the chaos and trouble this economy has created and decide to expand instead of contract. Whether some or all of these new companies work out will determine if management was right in its timing or maybe was a little ahead of the recovery. Time will tell.

More numbers: Price to sales is .96. Price to book is 2.45. Book value per share is $23.28. Operating margin in the last 12 months was 9.97% while Profit margin was 4.74%. Return on equity was 12.33%. Total revenues for 2009 were $2.792 billion with analysts seeing $3.040 billion in 2010. Earnings grew by 31% in the last quarter compared to the year before last period. Total cash is $111.90 million for $2.38 a share. Total debt is $818.67 million or about 40% of capital. Current ratio is 1.48. The stock is up over 100% since it hit a low of $25.65 on March 9, 2009. There is a dividend of $1.52 for a yield of 2.7%. The dividend takes 67% of earnings to pay.

Aggressive investors who think the global economy is about to show better numbers will find this stock of interest. Since it's a cyclical stock, it reflected the downturn last year with a drop of 20.5% in earnings ($4.18 to $3.32). Since it's a cyclical stock, it should reflect the improvement in the economy as well. One more thing: the stock hit $73.50 in 2008 so it's still well off the all-time high.

- Company Web site: www.greif.com

- Ted Allrich