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.

June 5, 2008 - Dionex Corp. (DNEX-NASDAQ) designs, manufactures, markets, and services analytical instrumentation and related accessories, and chemicals. The company's products are used to analyze chemical substances in the environment, and in a range of industrial and scientific applications. It offers a range of liquid chromatography systems, sample preparation devices, and related products that are used by chemists to separate and quantify individual components of chemical mixtures in industrial, research, and laboratory markets.

The company sells its products and services to environmental testing laboratories, life science and food companies, chemical and petrochemical firms, power generation facilities, electronics manufacturers, government agencies, and academic institutions.

It operates primarily in Austria, Australia, Brazil, Canada, China, Denmark, France, Germany, India, Ireland, Italy, Japan, Korea, the Netherlands, Singapore, Sweden, Switzerland, Taiwan, the United Kingdom, and the United States. The company was founded in 1968 and is based in Sunnyvale, California.

Sales and earnings are growing nicely at Dionex. Sales continue to improve in spite of the slow economies in the U.S., Canada and Europe. Japan, China and India, however, should more than make up for any slack as demand for DNEX's products and services continue to grow. Earnings are benefitting from a continued cost cutting program. Operating margins continue to widen.

Specifically, revenues were $291.3 million in 2006, then went to $327.3 million. In 2008, they hit $377.5 million. This year, analysts (3 follow the company) have a consensus estimate of $382.51 million (with a range of $381.9 million to $383.1 million). Next year, they see $390.49 million (the range is $381.36 million to $405.1 million). Sales in the third quarter (fiscal year ends June 30) were down a little compared to last year's third quarter for 2 reasons: weaker economic conditions and a stronger dollar since 75% of the company's sales come from outside the U.S.

On the earnings per share side (eps): in 2006, they were $1.74, then $2.31. Last year they jumped to $2.77. This year, analysts expect $3.13 and next year $3.18. Third quarter earnings came out at the end of April with results of 84 cents, well ahead of last year's same period of 72 cents eps. For the final quarter, analyst estimate 72 cents, a little below the 76 cents of the same quarter last year.

Future growth depends on new products, the life-blood of analytical instrumentation. In March, the company upgraded several of its mid-range ion-chromotography (IC) products. The company can now offer the full IC product line for reagent free IC technology. It also introduced an autosampler for use with its existing entry level and mid-range systems. Furthermore, another improved product, Chromeleon data management system, was released. It expedites the path from samples to results.

The stock bounced from its low of $42, hit in October/November of last year. It's up about 15% in the last 2 months, but still trading well below its all-time high achieved in the latter part of 2007 of $88.40. Investors know this story and like it so valuations are beginning to get a little rich in here.

More numbers: There is no debt, zero, none. Cash in the bank is $72 million. Cash per share is $4.09. Current ratio is 2.28. Price to sales is 2.51 while Price to book is 4.74. Book value is $11.65. Operating margin is 22.48% with Profit margin of 14.95%. Return on equity was a remarkable 22.48% for the last 12 months. There are 17.7 million shares outstanding. Insiders own 1.57%. Institutions have 96%.

This company will survive the economic downturn because it offer products and services that are much needed world wide. While there is competition, from its sales growth, it's apparent that customers like what DNEX has to offer. That sales growth will slow for the next year or so but when the global economy recovers (and if the dollar weakens), look for this company to do much better. In the meantime, do some more research, put it on a watch list, and if there's another dip in the price, it may be the right stock to add for many aggressivie portfolios.

Company Web site: www.dionex.com

 Ted Allrich