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.

December 10, 2010 - U.S. Airways Group, Inc. (LCC-NYSE) through its subsidiaries, provides air transportation for passengers and cargo. It operates approximately 3,000 flights daily to 190 communities in the United States, Canada, Mexico, Europe, the Middle East, the Caribbean, and Central and South America.

This company came out of bankruptcy in 2005, then went public with the help of Merrill Lynch. In the same year, it merged with America West Holdings Corp.

Starting in early 2007, the stock took a nose dive, hitting a peak of $63.30 in late 2006, then losing all power, going almost straight down for 18 months before pulling up at $1.50. The stock rallied, reached $16.40, then took another tailspin, pulling up again at $1.90 in early 2009. Now it's on the way up again. Can it keep powering higher?

With a stock price gyrating like this one, there has to be a reason. It's always earnings. LCC had some good years and bad years, coinciding with those price moves. Here's a brief history of earnings from 2005 to last year: -$10.65; $3.32;$4.52;-$22.06;-$1.54. Can you say volatile? This year, 11 analysts think the company will earn $2.23 a share, then $2.71 next year. Revenues haven't been nearly as erratic but they were down in 2009 to $10.46 billion from $12.12 billion in 2008. This year, consensus among analysts is for $11.91 billion, then $12.52 billion next year.

Profits are coming from new fees (as in baggage) and fewer available seats industrywide. That allowed airlines to increase ticket prices and see them hold. Also helping was an increase in international business travel where profit margins are wider. Working against profits were higher fuel costs and a slow recovery. International business and freight flights should increase next year, if the recovery continues.

More numbers: In the last 4 quarters, the company beat analysts' estimates by 60%, 22.50%, 13.60% and 5.10% respectively. Price to sales ratio is .15. Price to book is 23.95. Book value is 46 cents. Operating margin for the last 12 months was 6.24%. Profit margin was 3.4%. Return on assets was 5.76% while Return on equity was negative.
There's $1.94 billion in cash for $12.01 a share. Total debt is $4.43 billion. Debt to equity is 59.83. Current ratio is 1.01. Beta is 1.2. The stock is up 147.63% in the last 52 weeks. There are 161.53 million shares outstanding. Insiders own .47%. Institutions have 86.20%. There is no dividend.

Aggressive investors who like volatility (in price and earnings) will like this stock. The future, if the economy recovers as expected, looks bright. But even with a stronger economy, if interest rates move higher, all the debt on the balance sheet will add strong wind resistance for this airliner. The other side of that position is that if the planes fly full and oil drops, profits can soar.

- Company Web site: www.usairways.com

- Ted Allrich