Shares of Portland, Oregon-based boot company LaCrosse Footwear (NASDAQ:BOOT) were one of this morning's hot items. The company's shares rose 15% in early trading -- volume was more than 10 times its recent average by noon -- on news that the company will supply the U.S. military with $4.9 million in boots in the first two quarters of 2004.

This is the second company of this type we've looked at in recent months, and both have become hot stocks. LaCrosse has had a remarkable 12 months, its shares up well over 150%. Rocky Shoes & Boots (NASDAQ:RCKY), meanwhile, has continued to climb since we profiled its even more astonishing rise in late October.

Both companies' shares have seemingly captured the imagination of small-company investors. The stories aren't exactly the same, but a look at recent results from both companies suggests some of the reasons investors may think that in LaCrosse, they've bought a ticket to Rocky II.

Rocky has a long history of profitability, and while its balance sheet has considerable debt, its operating income has been more than enough to cover interest payments. Its profits have also been economic, not just a trick of accounting. Operating cash flow has come in ahead of net income for some years, and the company generates ample free cash flow.

LaCrosse can't match this. It's reported an operating loss for each of the last four full years. What's worse, sales have trended downward over that period as sales of its LaCrosse-branded products -- it also owns the Danner brands, which is what the military is buying for desert combat use -- have fallen in both the retail and industrial markets. There's considerable debt, too, and further outside funding might be needed soon.

But things have looked better through Q3. LaCrosse retail sales improved, though the industrial channel is still troubled. The company has turned a slim net profit and lowered expenses. Management is optimistic about the future for LaCrosse, and today's news only helps -- it's still small enough that a $5 million order is definitely meaningful.

In short, while investors are clearly making a leap of faith here, the reasons for their support are growing increasingly clear.

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Dave Marino-Nachison can be reached at