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.

March 25, 2010 - Esterline Technologies Corporation (ESL-NYSE) designs, manufactures, and markets engineered products and systems for the aerospace and defense, industrial/commercial, and medical markets primarily in the United States and Europe.

The company's Sensors & Systems segment produces high-precision temperature, pressure, and speed sensors; electrical power switching, and control and data communication devices; and related systems for jet engine and airframe manufacturers.

The Advanced Materials segment manufactures elastomer products for commercial aerospace, space, and military applications. It also develops engineered thermal components; silicone rubber and other elastomer products, such as clamping devices, thermal fire barrier insulation products, sealing systems, and tubing and coverings; lightweight metallic insulation systems for aerospace and marine applications; and combustible ordnance and warfare countermeasure devices for military customers.

This stock has been on a steep upward ascent since March of 2009 when it dipped to $18.90 a share. The whole market dipped back then, looking like it was going under for the last time. Since then, the stock bounced back strongly and currently trades at its all-time high. Is there any room left?

There is if earnings keep growing as they have in the past. In the last 5 years, average annual growth for earnings per share (EPS) was 18.43%. That includes a drop to $3.58 in 2009 from $3.94 in 2008. For the next 5 years, analysts don't see the same robust increase, estimating an average annual rate of 7%. This year, 11 analysts see $4.83 as a consensus for EPS, up 13.11% from 2010. Next year, they estimate $5.32 EPS, another spurt of 10.15%. Second quarter earnings will be out in May (fiscal year ends October 31). Look for $1.09 compared to 98 cents in last year's second.

Revenues are the same story. While they had a small retreat in 2009 to $1.425 billion, down from $1.483 billion, they rebounded in 2010 to $1.526 billion. This year, 10 analysts have a consensus estimate of $1.66 billion, then see $1.80 billion in 2012. For the first quarter of the fiscal year, sales were up 11% vs last year's first period.

Management has said sales will most likely slow a little. That's because orders were delayed from buyers on some high-margined aircraft replacement parts and filled last year. That division was 35% of total sales in 2010. To bolster top line growth, look for more new products as R&D funding comes to almost $100 million. The latest offering being tested is sensors for the Rolls Royce A350 engine, the new engine for the Airbus A350 jet.

The company is growing through acquisitions. It just bought Eclipse Electronics Systems in January for $120 million. It adds to the existing communications business, especially for the aerospace industry, and should be accretive to earnings this year. The last purchase was in 2009 when ESL bought Racal Acoustics which makes communications equipment and NMC Group which manufactures specialized fasteners. Those 2 cost $255 million.

Essential numbers: Trailing P/E is 13.70. Price to sales ratio is 1.38. Price to book is 1.48. Operating margin for the last 12 months was 13.44% and Profit margin was 10.19%. Return on equity was 10.93% and Return on assets was 5.31%. Total cash is $351.48 million for $11.53 a share. Total debt is $616.02 million. Debt to equity is 42.4%. Current ratio is 3.09. Book value per share is $47.67. Beta is 1.45. The range for the stock in the last 52 weeks was $43.58 to $73.49. There are 30.48 million shares outstanding with a Float of 30.38 million. Institutions own 100% of the Float. There is no dividend.

Aggressive investors looking for a stock with momentum will dig deeper in to ESL. While it's had a great run in the last 2 years and still has relatively benign valuations, the estimates for sales and earnings suggest it will be hard to see as much growth as the last 5 years produced. But if there are more acquisitions, expect all estimates to ratchet higher.