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.

May 20, 2011 - Penn National Gaming, Inc. (PENN-NASDAQ) and its subsidiaries own and manage gaming and pari-mutuel properties in the United States. It operates approximately 27,000 gaming machines; 500 table games; and 2,000 hotel rooms in 23 facilities in 16 jurisdictions, including Colorado, Florida, Illinois, Indiana, Iowa, Louisiana, Maine, Maryland, Mississippi, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, West Virginia, and Ontario.

PENN took a beating in 2008 and 2009 when earnings went into the red to the tune of $1.81, then $3.39. The stock reflected the bad news toward the end of 2008, hitting a low of $11.80, almost a year after it reached an all-time high of $63.70. Since that low point, the stock has bounced back and looks to be on track to continue its recovery.

Like most companies, PENN felt the economic recession. People weren't out gambling as much. Hard to do when you've lost a job or your home. But now conditions are improving. The worst seems to be over. And PENN is reaping the rewards.

Better results came from new table games at the Hollywood Casino at two venues: Charles Town Races and Penn National Race Course. There also was a new casino opened last fall: Hollywood Casino Perryville. To further bolster the bottom line, management is implementing cost cutting measures. Margins are growing. So are sales. Last year finished with $2.46 billion. This year, look for $2.73 billion (up 11.1%), then $3.02 billion in 2012, up another 10.4%.

More Hollywood Casinos are being built or on the drawing board. In the first half of this year, the popular gaming venue will open at Kansas Speedway and in Toledo. Adding to this year's sales and profits will be M Resort in Las Vegas, a purchase made in October of last year. The company bought the debt of M Resort at almost a 75% discount to take control of the newly built casino.

Essential numbers: Price to sales ratio is 1.21. Price to book is 1.66. Book value is $23.51. Operating margin for the last 12 months was 15.74% while Profit margin was negative 1.74%. Return on equity was negative 2.48% while Return on assets was 5.49%. Total cash is $235 million for $2.99 a share. Total debt is $2.15 billion or 51% of capital. Total debt to equity is 116.55%. Current ratio is .42. Beta is 1.57. The stock is up 44.73% in the last year. There are 78.39 million shares Outstanding with a Float of 66.62 million. Insiders own 15.42%. Institutions have 15.42% of the Float. There is no dividend.

Aggressive investors usually like to see faster earnings and sales growth than those presented by PENN. But these estimates could quickly be revised upward as the company gets approvals for new venues or buys other casinos (as it smartly did with M Resort). For the last 4 quarters the company surprised the Street with better than expected earnings by 3.60%, 12.10%, 7.10% and 17.10% respectively.