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.

August 27, 2010 - Netflix, Inc. (NFLX-NASDAQ) provides online movie rental subscription services in the United States. The company offers subscribers access to a library of movie, television, and other filmed entertainment titles on digital versatile disc (DVD). Its members can have DVDs delivered to their homes or can instantly watch movies and TV episodes streamed to their TVs and PCs.

Netflix is the largest online entertainment subscription service in America with more than 100,000 titles for rent. Subscribers can choose how many movies they want to rent at once, up to 8 at a time with no due dates or late fees. Monthly plans range between $4.99 and $47.99. Most rental are delivered by mail in one day's time of ordering.

There's no recession within the walls of Netflix. Revenues grew from $1.205 billion in 2007 to $1.365 billion in 2008 to $1.670 billion last year. For 2010, 31 analysts see growth of almost 30% to $2.17 billion, then another 27.70% gain next year to $2.77 billion.

Earnings are following right behind. In '07, they were 92 cents a share, then $1.34. Last year, they reached $1.98. This year, consensus from 28 analysts is for $2.80 (with a range of $2.43 to $2.95). For 2011, they see $3.74 (with a range of $3.11 to $4.65). Quarterly results will be out in October. Expect 72 cents a share compared to 52 cents last year. For the last quarter, 71 cents should be the total compared to 56 cents last year.

Other parts of the stock's success: online streaming of movies and TV shows continues to grow in popularity. In the second quarter, revenues were higher by 27% compared to last year's second period. Earnings were up by 48%. That trend will most likely continue, as will the acquisition of new eyeballs from Blockbuster. Expect better earnings for some time to come.

The company knows the value of instant gratification. It's pouring money into on-demand movies. The more titles available, the more revenues grow. Expect its full library of more than 100,000 DVD titles to be loaded and ready to view in the next one or two years.

Another reason earnings are improving: fewer shares outstanding. The company is actively buying back its own stock. In the first 6 months of this year, $153 million was spent. The board just authorized management to buy up to $300 million worth of stock by the end of 2012. That's on top of the past authorization that hasn't been fully deployed. There are currently 52.36 million shares outstanding with a Float of 45.42 million. Insiders own 13.32% of the stock while Institutions have 91.30% of the Float.

More numbers: Trailing P/E is 49.28 while Forward P/E is 32. Price to sales ratio is 3.53. Price to book is 37.61. Book value is $3.37. Operating margin for the last 12 months was 12.56% while Profit margin was 7.27%. Return on equity was a remarkable 54.63%. Return on assets was 22.97%. There's $279.08 million in cash for $5.33 a share. Total debt is $237.16 million, about 53% of capital. Current ratio is 1.71. There is no dividend. The stock last split 2 for 1 on February 12, 2004.

Even Aggressive investors will want to pause before trying to get on board this rocket. Any time a stock appreciates this fast, there is usually either a consolidation period or, if any earnings estimates are not met, a dip in the price. So many numbers look great. But investors have already read those and incorporated them into the price. Better to wait for a little pullback if you're interested in owning this one. Of course, further research can only determine if it's right for you.

- Company Web site: www.netflix.com

- Ted Allrich