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.

April 22, 2011 - China-Biotics, Inc. engages in the research, development, production, marketing, and distribution of probiotics products in the People's Republic of China. Products contain live microbial food supplements, which beneficially affect the host by improving its intestinal microbial balance.

It also offers Shining Beauty Essence to increase bone mineral density of elderly people and reduce negative health effects associated with the aging process; Shining Companion Bifidus Factor Granule to enhance the growth of bifidus in the human body and intestinal health; Shining Stomach Protection Capsules for protecting stomach walls and improving the digestive system; Shining Sicanel Capsules to reduce hyperlipidemia, or excess levels of fats in the blood; and Shining Golden Shield for enhancing the body's immune system, as well as bulk additives products.

China-Biotics serves individual and institutional customers, such as dairy manufacturers, animal feed manufacturers, pharmaceutical companies, and food companies. It distributes its retail products directly, as well as through distributors in the greater Shanghai area under the Shining brand. As of March 31, 2010, the company had 111 Shining branded outlets in Shanghai and 12 other cities in China. China-Biotics, Inc. was founded in 1999 and is based in Pudong, the People's Republic of China.

Aggressive investors have to like the story here: it's got China; it's got health; it's got small-cap stock. If you want risk, here it is but with a chance of real growth, in sales and earnings, and ultimately in stock price.

Revenues have steadily climbed for CHBT. In 2008, they were $54.2 million, followed by $81.4 million. Fiscal year 2010 should finish with $121.90 million, up 49.8%. One analyst thinks next year will show an increase of 17.70% or $143.50 million. Good growth, but it's starting from a low number.

The company is evolving as it starts to look internationally for sales. It recently signed its first deal in the U.S., though the press release didn't specify with whom or for how much. In China, the company is closing a number of its brick and mortar shops and relying more on the Internet for sales, reducing costs considerably. The Internet also gives it access to world markets immediately.

Two of the fastest growing Chiese markets are domestic dairy and animal feed, markets that require large production of bulk products. Analysts also believe the company will be opening more retail shops in affluent suburban areas of China. There's plenty of cash ($132.3 million) to fund any projects the company wants to pursue.

Essential numbers: Trailing P/E is 6.31 and Forward P/E is 4.13. Price to sales ratio is 1.75 and Price to book is .93. Book value is $9.04. Operating margin was 42.55% for the last 52 weeks while Profit margin was an extraordinary 43.08%. Return on equity was 25.93% and Return on assets was 12.15%. Total cash per share is $5.97. Current ratio is 4.12. Beta is 1.47. In the last year, the stock is down 51.26%. There are 22.15 million shares Outstanding with a Float of 11.40 million. Insiders own 48.55%. Institutions have 17.70%. There is no dividend.

This stock has been truly punished for missing an earnings' estimate. Valuations now are very compelling. But keep in mind that this company has its main operations in China, subject to Chinese government mandates such as restrictive monetary and fiscal policies. That's a political risk that has to be added in. And that's hard to quantify.