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 1, 2010 - MetroPCS Communications, Inc. (PCS-NYSE), a wireless telecommunication carrier, offers wireless broadband mobile services in the United States. The company offers voice services that allow customers to place calls to, and receive calls from, any telephone in the world, including local, domestic long distance, and international calls; data services, such as ringtones, ring back tones, games and content applications, text and multimedia messaging services, mobile Internet browsing, mobile instant messaging, location based services, social networking services, and push e-mail; and custom calling features consisting of caller ID, call waiting, three-way calling, and voicemail.

As of December 31, 2009, it operated approximately 153 retail stores in the metropolitan areas of Atlanta, Boston, Dallas/Ft. Worth, Detroit, Las Vegas, Los Angeles, Miami, New York, Orlando/Jacksonville, Philadelphia, Sacramento, San Francisco, and Tampa/Sarasota. The company is headquartered in Richardson, Texas.

The company went public in 2007 but started business in 1994 as General Wireless Inc., changing its name to MetroPCS in 2004. Earnings have been volatile since the IPO, starting with 25 cents a share, then 22 cents, followed by 57 cents (the high point so far). In 2008, earnings slipped to 50 cents. Last year, they finished at 49 cents. 25 analysts follow the company and have a consensus estimate of 67 cents for this year and look for 90 cents next year (with a range of 63 cents to $1.27). Third quarter results should be out in a few weeks with expectations of 21 cents compared to 21 cents last year in the third period. The fourth quarter should show 17 cents, well ahead of the 9 cents made last year in the final period. In the second quarter, the company beat estimates by 69.2%, reporting 22 cents a share vs 13 cents projected by analysts. Four quarters ago, it had a 133.3% upside surprise, delivering 21 cents compared to an estimate of 9 cents.

MetroPCS has a simple calling plan: flat-rate, pre-paid unlimited wireless service. Pay one fee ahead of your usage, then call or text whenever the mood strikes. In the first quarter alone, the company picked up 691,602 subscribers with the plan. In the second quarter, in spite of a softer economy and increased competition, the company added 303,009 new customers. Total customers are now close to 7.4 million.

Churn rate is the measure of how many customers leave. Last year, the company saw about 5%. Now it's closer to 3%. Keeping customers for a certain period of time is essential to profitability as set-up costs and servicing new clients are larger than one month's fee. And those costs are going up as the company upgrades its networks and adds new headsets. While monthly average revenue per user is down a little (to about $40), total revenue and net income are trending higher.

There's lots of cash in the bank. $1.076 billion to be almost exact. That gives the company plenty of flexibility for investing in technology, buying more spectrum or paying down debt (that's 60% of capital at $3.67 billion). There's no dividend yet.

More numbers: Market cap is $3.71 billion. Trailing P/E is 17.9. Price to sales ratio is .97. Price to book is 1.53. Book value is $6.84. Operating margin for the last 12 months was 15.75%. Profit margin was 5.49%. Return on equity was 9.17% and Return on assets: 5.17%. Revenues were $3.81 billion. Cash per share is $3.04. Debt to equity ratio is 1.52. Beta is .60. 52-week high was $10.55 on September 29; the low was on January 29 at $5.52. (All-time high was in 2007 at $40.90.) There are 353.89 million shares outstanding with a Float of 238.83 million. Officers and directors own 24.51% of the stock. Institutions have 67.50%.

PCS is still a relatively small company when compared to AT&T, Verizon, Sprint and larger telecoms competing for the same customers. But it's gaining on them. Earnings have been volatile, but the company seems positioned to show increasing profits, especially with new offerings next year. Management is focused on cost cutting and recenlty refinanced $1 billion in 9.25% senior notes due in 2014 with $1 billion of 7.875% securities due in 2018, saving about $13.75 million a year in interest expense.

Aggressive investors should like this story. The stock once soared much higher but peaked quickly and has been on a downward path for the last three years. It seems to have bottomed out early this year, trading at $5.50 before heading higher. Can it keep going? If management beats analysts' estimates by large margins every quarter, it definitely will.

- Company Web site: www.metropcs.com

- Ted Allrich