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.

September 3, 2010 - Volcano Corp. (VOLC-NASDAQ) designs, develops, manufactures, and commercializes a suite of intravascular ultrasound (IVUS) and functional measurement (FM) products used in the diagnosis and treatment of vascular and structural heart disease.

The company's products under development are IVUS guided therapy products, such as IVUS guided stents and IVUS guided coronary and peripheral balloons; forward looking IVUS for minimally invasive diagnostic and therapeutic applications in the coronary and peripheral vasculature; and optical coherence tomography (OCT) technology that allows imaging of detailed structures in the vasculature.

Its ongoing clinical studies include the bifurcation lesion analysis and stenting, assessment of dual anti-platelet therapy with drug-eluting stents, and Volcano OCT image lesion analysis using intravascular optical coherence tomography.

In addition, the company develops and manufactures micro-optical spectrometers and optical channel monitors to telecommunication companies.

Volcano Corporation serves physicians and technicians who perform PCI procedures in hospitals, and other personnel who make purchasing decisions on behalf of hospitals through its direct sales force and distributors, as well as through supply and distribution agreements with third parties. As of December 31, 2009, it had an installed base of approximately 5,000 consoles worldwide. The company, formerly known as Volcano Therapeutics, Inc., was founded in 2000 and is headquartered in San Diego, California.

Since the company went public in 2006, it hasn't earned a penny. Losses piled up. But that's about to change. Analysts think this is the year VOLC reports positive earnings, to the tune of 11 cents a share. Last year, it lost 31 cents. Next year, 9 anlaysts have a consensus estimate of 39 cents, almost 260% better than this year. The range for next year is between 28 cents and 57 cents.

In the most recent quarter (ended June 30), sales were up 36%. The FM (functional measurement) division showed a 25% increase while the IVUS (intravascular Ultrasound) improved by 51%. Expect at least double digit growth in sales for another 2 to 3 years as demand ramps, domestically and internationally.

Helping with that growth: new products. There's a medical device coming in the third quarter of 2010 that will be initially for cardiovascular applications. Later it will be used for other body applications. Most recently, VOLC introduced a pressure guide wire that works with multimodality consoles. Though not a new device, there's now a direct distribution channel in Japan after the company severed ties with a third-party distributor. Naturally there are several new products under development in R & D that are in clinical trials which will, if successful, be offered in the coming years.

Another contributor to growth: acquisitions. Most recently the company bought Axsun Technologies which is already adding to revenues. It's in the process of buying Fluid Medical which develops advanced imaging technology for catheters, a sector that Volcano already participates in. The new purchase will be about $4 million. With these additions, VOLC can apply its expertise and knowledge and quickly grow its offerings and expand its technology base.

More numbers: Forward P/E is 60. Price to sales ratio is 4.35. Price to book is 4.89. Book value is $4.77. Operating margin, profit margin, return on assets and return on equity are all negative due to lack of earnings. Revenues for the last 12 months were $265 million. There's $127.60 million in cash for $2.52 a share. Total debt is $135,000. Debt to equity is .06. Current ratio is 5.21. There are 50.66 million shares outstanding with a Float of 47.77 million. Insiders own 4.49%. Institutions own 100% of the float. There is no dividend.

Aggressive investors will like this story. Next earnings will be out in October. Expectations are for 2 cents a share vs a loss of 8 cents a share last year in the third quarter. Investors might want to wait to see if the company meets that number before venturing into this stock. Two quarters ago, analysts thought the company would lose 3 cents a share. It lost 8 cents. The quarter before that, analysts thought the company would report a negative 2 cents a share. It reported a positive 3 cents. Any negative surprise here could be very costly.

Company Web site: www.volcanotherapeutics.com

- Ted Allrich