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 13, 2009 - Steven Madden, Ltd. (SHOO-NASDAQ) together with its subsidiaries, designs, sources, markets, and retails footwear for women, men, and children. The company also designs,sources, markets, and retails handbags and accessories.

As of December 31, 2008, it owned and operated 92 retail stores under the Steve Madden name; and 4 retail stores under the Steven name, as well as operated 1 e-commerce Website. The company distributes products through its retail stores, e-commerce Web site, and department and specialty stores in the United States, as well as through special distribution arrangements in Canada, Europe, Central and South America, Australia, and Asia. Steven Madden, Ltd. was founded in 1990 and is headquartered in Long Island City, New York.

Here's what caught my eye about Steven Madden: Earnings could jump by 24% this year, hitting $2.11, up from $1.70 in 2008. Next year, they may go to $2.29. That's impressive in an economy where most other companies announce lower earnings and even worse forecasts. So Steven Madden is doing something right, even when most consumers are tightening their spending. Earnings should average 15% annual growth over the next 5 years. Over the last 5 years, they improved by 37% a year, on average.

Part of the earnings increase goes to cost cutting. Another part is modest sales gains. Revenues last year were $457 million. This year, analysts have $471.1 million pencilled in with $488.91 million for next year. Sales are projected to increase by 8.5% a year, on average.

Handbags are the next big market sector for Madden. It already produces its own label but has added Zone 88 and Shakedown Street from SML Brands which designs private label handbags for mass merchandisers (can anyone say Wal-Mart?) and mid-tier retailers. While small in size (the deal cost $1.25 million plus some consideration for inventories), this division along with other accessories improves the long-term growth prospects for accessories at Madden, helping to diversify revenues beyond shoes.

The stock has done well this year, hitting a low of $13.40 early, then rocketing to $31.51 where it currently trades. The fuel for the rocket ride: an earnings surprise in the June quarter, fully 34.7% ahead of analysts' expectations. They predicted 49 cents a share. The company delivered 66 cents. For the September quarter, consensus estimate is for 63 cents a share, a little ahead of last year's 62 cents. For the last quarter, look for 45 cents, above the 40 cents of last year's fourth period.

More numbers: There is no debt on the books. Price to sales is 1.23. Price to book is 2.53. Operating margin for the last 12 months was 12.65% with Profit margin coming in at 7.86%. Return on Equity was a very respectable 17.91%. Total cash is $64 million for cash per share of $3.53. Current ratio is 3.44. Book value per share is $12.68. Beta is 1.56. There are 18.08 million shares outstanding with a float of 15 million. Insiders own 10.87% of the stock. There is no dividend.

If you noticed that beta number (1.56), it gives a clue as to the volatility this stock carries. This one is not for the faint of heart. But if the company can deliver the earnings growth analysts expect, the stock should continue to perform well. Just keep your seatbelt on if you decide, after more research, that this one belongs in your portfolio.

- Company Web site: www.stevemadden.com

- Ted Allrich