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.

October 30, 2008 - Conn's Inc. (CONN-NASDAQ) through its subsidiaries, operates as a specialty retailer of home appliances and consumer electronics. It sells home appliances, including refrigerators, freezers, washers, dryers, dishwashers, and ranges; and various consumer electronics such as camcorders, digital cameras, DVD players, video game equipment, MP3 players, home theater products, and LCD, plasma, and DLP televisions.

Yes, it's an electronics retailer, competing with Circuit City and Best Buy and everyone on the Web. The difference: Conn's sales grew the last 2 years. And profits are holding at a respectable level. With the economy slowing noticeably, does this retail operation have a competitive advantage? Can it continue to grow sales and earnings?

Analysts think so. They see $1.68 for this year (fiscal year ends January of 2009). That will match last year's total. But next year, the 5 analysts covering the company show $1.81 for eps, up 7.7%. That's the consensus number. The range goes from $1.44 to $2.26.

But this quarter will be a little lower than anticipated (25 cents is projected with earnings to be released on November 26). That's because of the hurricanes. On October 13, the company issued this report: its credit portfolio performance will be hurt for a period due to the effects of Hurricanes Gustav and Ike.

It posted better-than-expected second-quarter results in August, but this quarter it lost 144 store-days between Aug. 31 and Sept. 24 to the hurricanes.

Chief Executive Thomas Frank said in a statement that the company has responded aggressively to drive sales volumes in October.

"Though we do not anticipate experiencing the level of increases in the near-term that we saw after Hurricanes Katrina and Rita, we believe the positive impact on sales could last longer," he said.

Revenues this year are forecast at $891.58 million, up from $824.13 million last year. Next year, look for $966.75 million. That's an increase of 8.4%.

Not very exciting growth numbers, sales or earnings. Except for the fact that they're being estimated for an economy that will continue to slow. In other words, even with a constricted consumer, analysts see Conn's able to grow its business. Most likely because of the diversity of their products. Last count, they had over 1100 SKU's or individual products at prices designated as good, better, and best.

Conn's sells national brands such as GE, Whirlpool, Frigidaire, Maytag, LG, Mitsubishi, Samsung, Sony, Toshiba, Serta, Hewlett Packard, and Compaq. It even carries Hello Kitty. In the Home and Garden section, you'll find Cummins, Briggs & Stratton, Poulan, Weber, and Toro.

Some numbers: Price to Sales is .3 with a Price to Book of .8. Profit margin is 4.45% with an Operating Margin of 7%. Return on Equity is a healthy 11.9%. There's $46.77 million in cash on the books making for $2.08 per share. Total debt is $58,000. Yes, thousand. Book Value is $14.61 a share. There are 22.4 million shares outstanding but a float of 10.05 million. Insiders own 54.5% of the stock, always a positive sign.
There is no dividend.

If you think the economy will recover at all, this stock should be of interest. Management has proven it can weather hurricanes as well as economic slowdowns. While it's small and regional, it's a company that's been able to grow sales and earnings in a very difficult environment.

- Company Web site: www.conns.com

- Ted Allrich