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.

January 14, 2010 - Standard Register Co. (SR-NYSE) and its subsidiaries provide business documents and related services for the healthcare, financial services, commercial, and industrial markets primarily in the United States. It operates in four segments: Healthcare, Financial Services, Emerging, and Industrial.

The Financial Services segment provides documents, such as specialized prints, customer communications, marketing solutions, training solutions, and enterprise print management workflow solutions. It serves the document needs of the financial services market, which consists primarily of retail banks, insurance carriers, credit agencies, security dealers, insurance agents/brokers, and holding companies.

The Emerging segment offers documents, such as specialized prints, customer communications, marketing solutions, training solutions, and labels. It serves the business-to-business or commercial market, which primarily includes retailers, business service providers, wholesalers, transportation services, technology/communication providers, non-industrial manufacturers, and government.

The Industrial segment provides printed production parts to the industrial manufacturing market. Its products and services comprise functional and decorative labels, in-mold labeling and decorating, professional design services, and printed technical literature and other documents. The company was founded in 1912 and is based in Dayton, Ohio.

First, earnings are turning, for the better. They were negative in 2007, minus 3 cents. But they bounced right back to 24 cents in the black in 2008. They dipped to 3 cents in 2009. Analysts think the company finished with 7 cents last year. They predict 15 cents for this year. The stock price reflected the unusual pattern of earnings and went from $9.30 in early 2009 to a low of $2.60 six months later, then rallied to $8.50 before tanking again last year, back to $2.70. Now the stock is on the rise again.

Revenues declined each year since 2007 when they were $865.5 million. They went lower, to $791.1 million in 2008, then $694 million in 2009. 2010 most likely finished with $665 million. This year, analysts see that number improving to $680 million. Better top line numbers were reported in the September quarter of 2010, $163.6 million compared to $163.5 million in the third quarter of 2009, the first gain since 2006. Industrial markets were the main source of higher sales as the economic recovery started. They were up by double digits. Healthcare markets showed a small increase as well and again, for the first time in years. Combined they were able to overcome the decrease in the commercial side. Analysts think the December quarter will have a hard time beating the previous fourth quarter top line results because of an extra week in that period.

Don't expect revenues to expand quickly in 2011 since many of the products Standard offers are being surpassed by new technology. But look for management to help profitability by cutting more costs, continuing its restructuring program begun in 2009 with a goal of saving between $30 million and $40 million in operating expenses annually by December, 2011. New expenditures on technology have offset some of the savings but should begin to contribute to better margins. Another high cost for the company: pension plans. It contributed $25 million to them in 2010. Analysts see this number going higher this year and beyond.

What makes this small cap stock so interesting is that it has a very good dividend, one that yields 5.9%. While it was cut from 92 cents a year in 2007 to its current level of 20 cents, the board obviously wants to reward shareholders who stay with the company. The yield is 5.9% at a $3.50 stock price.

More numbers: Price to sales ratio is .15. Price to book is 2.12. Book value is $1.65. Operating margin for the last 12 months was 1.04% and Profit margin was .20%. Return on equity was 2.80% and Return on assets was 1.19%. Total debt is $42.02 million. Debt to equity is 87%. Current ratio is 2.23. Beta is 1.69. For the last 52 weeks, the stock is down 34.85%. The 52-week low was $2.73, the high: $6.56. There are 28.94 million shares outstanding with a Float of 17.63 million. Insiders own 27.03%. Institutions have 55.80% of the Float.

Aggressive investors who like small companies making a come back should find this story intriguing. With the high insider ownership, they know management is rowing the boat in the same direction as all shareholders. They've got a big stake in this company. If management can keep to its determined goal of cost cutting and develop new products, this company may be able to get back to the $35 level. It traded there in the late 90's.

- Company Web site: www.stdreg.com

- Ted Allrich