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.

December 12, 2008 - Michael Baker Corp. (BKR-AMEX) through its subsidiaries, provides engineering and energy services for public and private sector clients worldwide. The company's Engineering segment provides various design and related consulting services, including program management, design-build, construction management, consulting, planning, surveying, mapping, geographic information systems, architectural and interior design, construction inspection, constructability reviews, site assessment and restoration, strategic regulatory analysis, and regulatory compliance.

The company's Energy segment provides services ranging from outsourcing solutions to specific services, such as training, personnel recruitment, pre-operations engineering, maintenance management systems, field operations and maintenance, procurement, and supply chain management. It serves independent oil and gas producing companies. The company was founded in 1940 and is headquartered in Moon Township, Pennsylvania.

The company recently announced its 3rd quarter earnings (Nov. 10). They set new records. For the quarter, Baker reported net income of $11.8 million, or $1.33 per diluted share, on total contract revenues of $181 million. This compares to restated net income of $4.5 million, or $0.51 per diluted share, on total contract revenues of $176 million in the third quarter of 2007. The substantial increase in earnings in the quarter resulted from improved operating performance in both the Engineering and Energy segments, as well as several significant nonrecurring items in Energy, including the reimbursement of restatement-related professional fees of $3.0 million, and the favorable impact of tax settlements, including penalty liability reductions totaling $1.6 million and interest liability reversals of $2.0 million. The increase in total contract revenues in the current quarter is attributable primarily to an 18 percent quarter-over-quarter growth in Engineering segment revenue, which was partially offset by a 17 percent decrease in Energy segment revenue.

The 18 percent increase in third quarter 2008 revenues in the Engineering business resulted primarily from work performed as support for the Department of Homeland Security's efforts to secure U.S. borders, an increase in work performed for the Company's unconsolidated joint venture in Iraq, and growth in several existing transportation projects.

Earnings for the fourth quarter are predicted to be 96 cents (the average for the 2 analysts covering the company). For the full year, look for $3.91 and in 2009, $3.93. In 2007, earnings per share were $2.18. Over the last 5 years, annual average earnings growth was 33.13%. For the next 5, analysts see 24%. Revenues were $726.97 million in 2007. This year analysts predict $699.13 million and next year, $641.73 million.

More numbers: Price to sales ratio is .46. Price to Book is 2.37. Operating margin for the last 12 months was 7.13% while Profit margin was 4.62%. Return on Equity was 26.13%. There's $41.2 million in cash in the bank. There is no debt. Current ratio (current assets divided by current liabilities) is 1.82. Book Value is $15.97. There are 8.85 million shares outstanding and a float of 8.76 million. Insiders own 12.1% of the stock. Institutions have 78%. There is no dividend.

Michael Baker stock had a noticeable dip recently, going to $14.50, only to rebound nicely to its current level of $38. The stock hit $53.22 late last year. With new contracts, such as the one with the Pennsylvania Department of Transportation to replace 3 bridges in lower Pennsylvania, the company should have steady work even with a weak economy. But if tax revenues decrease, the company will lose some of its government revenues. And lower oil prices can also negatively affect sales.

While revenues are projected to decrease this year and next, earnings are expected to reach new highs for the next 2 years. That can only mean more cost cutting and better efficiencies. If revenues were to be higher than expected, look for even better profitability as operating and profit margins would expand. Aggressive investors should find this stock of interest for further investigation.

- Company Web site: www.mbakercorp.com

- Ted Allrich