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.

July 1, 2011 - American Axle & Manufacturing Holdings, Inc. (AXL-NYSE), together with its subsidiaries, engages in the manufacture, engineering, design, and validation of driveline and drivetrain systems, and related components and chassis modules for the automotive industry in the United States.

It offers products for light trucks, sport utility vehicles, passenger cars, crossover vehicles, and commercial vehicles. The company was founded in 1994 and is headquartered in Detroit, Michigan.

American Axle has come a long way in a short period of time. In early 2009, the stock was trading at 30 cents a share. In 2008, the company lost $4.63 a share and in '09, lost another $2.37 a share. Things looked very bleak. But last year, earnings took a giant leap upward and went to $1.55 a share. This year, 9 analysts have a consensus estimate of $1.79, then see $2.22 for 2012. Why the renaissance?

Two factors contribute to the success: a rebound in the new car market and aggressive restructuring within the company. Since AXL supplies the auto manufacturers, new car and truck sales drive its revenues. With higher demand for new cars and trucks over the last 2 years, sales have increased form $1.52 billion in 2009 to $2.283 billion in 2010. This year, expect $2.5 billion, then $2.88 billion in 2012.

As for the restructuring, management cut back its U.S. operations and focused on emerging markets. Those efforts resulted in the highest operating margins ever reported. For the last 12 months operating margins were 9.36% and profit margin was 5.68%.

Given this good news, it's hard to explain the stock's recent fall back, going from a high of $16.20 on January 18 to its current level, almost 30% below. For the last 52 weeks, the stock is higher by 56.21%. Part of the reason for the pullback may be investors' concern over the economy, the fragility of the recovery. Because the auto industry usually has long cycles when it turns, a slowdown in the economy would short circuit the normal positive trends from an upturn. It could be a very short upward cycle this time, leaving AXL in its dust as car manufacturers wind down operations. There isn't strong evidence of this yet, but many investors may be anticipating the worst at any moment. While May light vehicle sales were down from April, it was greatly influenced by the lack of parts being supplied by Japan after its earthquake and tsunami devastation. That is only a temporary problem. June sales were better.

Another factor: the price of gas. With AXL's strong reliance on trucks and SUV's, the price of gas will influence these sales. Right now, oil is coming down, but if it were to rebound and move well above $100 again, that would be a negative for AXL.

The company has a broad base of customers, but GM accounted for 75% of 2010 revenues. The company provides driveline components to GM for light trucks, SUVs and rear-wheel drive passenger cars. Other original equipment manufacturers for AXL parts include DaimlerChrysler, Ford, Nissan, Visteon, Delphi and more.

Essential numbers: Trailing P/E is 6.31. Price to sales ratio is .36. Book value is negative at $5.66. Return on assets for the last 12 months was 6.81%. There's $217 million in cash for $2.89 a share. Total debt is $1.01 billion. Beta is very high at 2.68. There are 75.36 million shares Outstanding with a Float of 68.54 million. Insiders own 9% of the stock. Institutions have 77.1% of the Float. There is no dividend.

Aggressive investors may want to carefully consider this stock, especially since it's taken a breather recently. The future looks bright, as long as economies continue to recover, new cars and trucks are bought, and oil stays below $100 a barrel.