No doubt you noticed yesterday that Books-a-Million (NASDAQ:BAMM) was one of the leading gainers on the NASDAQ. The stock was up over 23% after the company reported fourth-quarter and full-year 2006 earnings. What I can't figure out is who's buying the shares, and why.

OK, the company did report a decent fourth quarter. Earnings were up 36%, at $0.90 a stub compared to $0.66 the prior year. If that's all the market knew, then I could understand a little excitement -- but reading behind the headlines reveals there's more to this story. The fourth quarter had an extra week, and the company recorded a one-time gain from gift card breakage relating to prior years. Gift card breakage, by the way, means the company gets to keep money from unredeemed gift cards sold in prior periods -- those pesky cards have a way of getting lost.

The extra week added an estimated $0.07 cents to fourth-quarter income, while the gift card windfall tacked on another $0.09. Discounting those two unusual events, EPS would have been $0.74, a gain of 12%. This is respectable, but not earth shattering. (The company only attached a number to the gift card effect. When asked on the earnings call about the extra week, the response was, "we didn't capture that number." The extra week impact estimate came from David Magee at SunTrust Robinson Humphrey, the only analyst I can find who follows the stock.)

Now I don't want to be seen as disparaging a small company in a tough industry who just had a respectable quarter. Books-A-Million controlled its expenses well during a lean holiday bookselling season that didn't have a wealth of best-sellers or movie tie-ins to drive customers into the stores. The company also enjoyed some margin expansion on lower markdowns, and ended the quarter with inventory in good shape, down by 2% compared to the prior year -- job well done.

But is there an investment theme here that warrants a huge jump in share value? I don't think so. Comparable-store sales were down 2.4% for the quarter, and down just under 1% for the just-completed twelve months. The company ended the year with 206 stores, one store more than last year, and one fewer store than four years ago. There's only so far that expense and inventory control can carry a retailer; growth would be helpful as well.

I can think of three plausible reasons this stock soared on Monday. The first is buying by lemming investors chasing a surprise upside earnings announcement without checking out the facts. The second is an institution that knows something the rest of us don't; this is unlikely but not out of the question. The third is pretty straightforward. Keep in mind this is a thinly traded stock, with only 8 million shares in float. As of March 12th there were 1.3 million shares short according to Yahoo! Finance. Yesterday 1.2 million shares changed hands. What do you want to bet that a bunch of short sellers were scrambling to cover a bad position on Monday as the stock moved up?

Regardless of the reason, well-informed Motley Fool investors will exercise caution before hopping on the (probably) short-lived BAMM bandwagon. The company is an increasingly well-run regional bookseller, apparently holding its own against the likes of Barnes & Noble (NYSE:BKS), Borders Group (NYSE:BGP), and (NASDAQ:AMZN). But I don't see it being a 25-bagger any time soon.

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Fool contributor Timothy M. Otte surveys the retail scene from Dallas. He welcomes comments on his articles, but doesn't own stock in any of the companies mentioned in this article.