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 20, 2010 - Sinclair Broadcast Group, Inc. (SBGI-NASDAQ) a television broadcasting company, owns or provides certain programming, operating, or sales services to television stations in the United States. The company broadcasts free over-the-air programming comprising network provided programs; news produced locally; local sporting events; and syndicated entertainment programs.

Sinclair focuses on mostly medium-sized markets and reaches about 22% of U.S. TV households. It has Network affiliations with Fox (20 stations), MyNetwork TV (17), ABC (9), CS (9), CBS (2), NBC (1).

What caught my eye: this stock traded for 90 cents a share in early 2009, down from $17.70 in 2007. Its earnings never went negative (haven't been since 2002. In fact, earnings have been fairly strong in a weak economy (23 cents in 2007, 72 cents in 2008, 66 cents last year). This year, 3 analysts have a consensus estimate of 93 cents a share, then 79 cents next year. The reason for the bump this year: political campaigns in the fall.

Next quarterly earnings will be announced on November 3. Look for 20 cents a share, up from 18 cents last year. For the fourth quarter, expect 37 cents compared to 24 cents last year in the fourth.

Advertising is coming back to television. With a weakened economy, advertisers naturally cut their ad budgets. Sinclair felt the cuts. Now ad spending is on the rise as well as price hikes. Furthermore, Sinclair will benefit in the fall from ad campaigns of local politicians in the mid-market regions it serves. Some analysts see as much as a 20% increase in ad revenues in the normally soft third quarter.

Of the advertisers coming back with some real dollars, the automotive sector is most prominent. The third quarter could show as much as a 50% increase year over year from car manufacturers. Ford, Toyota, and Chrysler have already bought more time. Local companies such as restaurants, furniture, media and services have also raised their air time. SBGI's revenues are mostly from local advertisers. In the second quarter, they were up 17%. National sales also increased, showing a 28% rise in the same quarter.

The big boost this fall will come from political contests at the governor and congressional levels. As Democrats try to hold their leads and Republicans are anxious to replace them, expect big budgets from both parties, most of which will be spent on TV advertising. Some analysts think revenues from political campaigns will far exceed the 2006 races, maybe by as much as $40 million in ad sales for Sinclair. After the political races, look for another boost from the Super Bowl in the first quarter, carried by the Fox Network. Sinclair has 20 stations with Fox, its largest affiliate.

One caveat for Sinclair: this is a highly leveraged company with debt of $1.3 billion. Furthermore, book value is a negative $2.23 and has been in the red since 2007.

More numbers: Price to sales ratio is .76. Operating margin for the last 12 months was 27.55% while Profit margin was 8%. Return on assets was 7.65%. There's $42.82 million in cash for 53 cents a share. Current ratio is 1.30. Beta is 1.82. Total shares outstanding are 80.33 million. Float is 47.11 million. Insiders own 9.53% of the stock but have 83% of the voting power. Institutions own 65% of the Float. There is no dividend.

Aggressive investors who are bullish on the economy will find this stock intriguing. If advertisers keep raising their budgets, Sinclair will be one of the beneficiaries. The political campaigns will add icing to that cake. Then in February, the Super Bowl airs with its usually record setting ad time. Sinclair's earnings estimates may have to be revised upward before the end of the year.

- Company Web site: www.sbgi.net

 Ted Allrich