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.

July 15, 2008 - Kirkland's Inc. (KIRK-NASDAQ) operates about 325 stores in some 35 states, which stock decorative home accessories and gifts, including framed art, mirrors, candles, lamps, picture frames, artificial flowers, rugs, garden accessories, and coffee-table books.

Let's get some the negative numbers out right away. Sales growth for fiscal year 2008 (ended January 31) were down 11.2% to $396,700,000. Losses mounted to $25.9 million on those sales. Last year, earnings per share were a negative $1.33 (after losing 1 cents a share in 2006). For this year, analysts look for 2 cents a share on the plus side on revenues of $391.8 million and next year, expect 20 cents a share with revenues moving up to $397.19 million. This is a company that delivered 93 cents a share 4 years ago. So it can perform when the economy doesn't have a housing meltdown.

Another number to consider: Book Value is $2.04 cents a share based on the most recent quarter. The stock is trading at $1.85. You're not paying anything for the business right now. Of course if that 2 cents a share profit turns to a loss this year, the book value will go lower. But if analysts are right (there are 2 that follow the company), then investors are buying a business for less than the equity. That always makes for an intriguing stock.

KIRK's makes items that people can do without when times are really difficult. Adding touches to a home is always nice but not mandatory like taking a prescription drug or putting food on the table. Almost everything available at a Kirkland store is a discetionary item, and discretionary income is hard to find right now with gas nearing $5 a gallon and a difficult job environment. So investors shouldn't expect stellar performance for a while.

However, when the economy begins to pick up, housing starts to sell, and jobs are more plentiful, KIRK's will feel it. Homeowners will be back to buy the touches that make a house a home. Furthermore, its seasonal revenues from Christmas and Easter will show the effects of a better job market. This is strictly a play on the economy, and if you're a bullish investor or at least one who thinks that a new president will turn the economic tide, then KIRK may be worth more time.

Here are more numbers: Price to Sales is .10. Price to Book is .94. Total Cash in the bank is 29 cents a share. Current ratio (current assets to current liabilities) is 1.51. Beta is 1.41 (measure volatility of stock compare to the S&P 500 index). The stock is down 43% in the last year. It traded as high as $3.50 in July of last year. It hit 55 cents a share in January of this year. So it's up about 200% in 7 months. Average daily volume for the last 3 months was 114,698 shares. There are 19.59 million shares outstanding. There is no long term debt on the books.

KIRK is one of many, many small stocks that is hanging in there as the economy slows down. In the past, management delivered good earnings (the stock hit an all-time high of $22.40 in 2003). Whether it can regain that lofty ground will depend on a better economy and giving shareholders stellar earnings again.

But here's the last number to consider: in the last 6 months, insiders sold 7.2 million shares while buying only 10,000. That's almost half their total positions. When they start buying again, it's probably a good indicator that they see things finally turning around.

- Company Web site: www.kirklands.com

- Ted Allrich