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.

June 10, 2011 - Red Robin Gourmet Burgers, Inc., (RRGB-NASDAQ) together with its subsidiaries, develops, operates, and franchises casual-dining restaurants in the United States and Canada. As of May 31, 2011, the company owned and franchised approximately 450 Red Robin restaurants in the United States and Canada.

Red Robin stock took flight after first quarter's earnings were released. Analysts expected 24 cents. The company delivered 58 cents or a 141.70% upside surprise. But that wasn't the only surprise. The last quarter of 2010 showed a 140% better than expected result: 12 cents vs estimates of 5 cents. Since January the stock is up 75%. Nice return for a 5 month hold.

The good news isn't over. 9 analysts see the June quarter finishing with 37 cents a share compared to last year's 28 cents. For the September quarter, they see 26 cents vs 11 cents last year in the third period. For the full year of 2011, look for $1.49. In 2010, EPS was 85 cents. For 2012, expectations are for $1.84.

While revenues are growing, it's management's focus on operating efficiency that's contributing most to the bottom line. Sales were up 4% in the first quarter to $286.6 million, in line with expectations, but costs were cut via a new program named Project RED. It's purpose: higher revenues, lower expenses, better use of capital. The menu has some new items, higher priced morsels to help with revenue gains. Management identified 200 cost cutting items and will proceed with the needed changes. It's already eliminated 40 of them. Expectations are for annual savings of $16 million to $18 million once full implementation is deployed. Labor and occupancy costs were also lowered to help widen margins.

But all isn't clear sailing. The price of beef is a concern, the company's main food ingredient. Beef has been going up and most likely willl continue that direction. To counter that, new menu items have more chicken selections and salads. The RED program should also alleviate some of that pain.

Essential numbers: Price to sales ratio is .62. Price to book is 1.79. Book value is $19.76. Operating margin for the last 12 months was 2.49% while Profit margin was 1.26%. Return on equity was 3.71% and Return on assets was 2.37%. Total revenues for the last 12 months was $875 million. Total cash is $14.61 million for 96 cents a share. Total debt is $141.77 million. Total debt to equity is 47%. Current ratio is .48. Beta is 1.70. In the last 52 weeks, the stock is up 96%. There are 15.25 million shares Outstanding with a Float of 11.52 million. Insiders own 28.19% and Institutions have 75.80% of the Float. There is no dividend.

Investors already love this stock, evidenced by its strong price movement in the last year. But it's not at the all-time highs. Those were reached in 2005 at the $62.90 level. Back then earnings were $1.64. Earnings are almost back to that level while the stock isn't anywhere near that old high. It's a different stock now. The economic recession changed investors' enthusiasm. Still, with the new focus on cutting costs and fewer shares, it seems continued upside earnings surprises are in store.