As every risk-taker knows, shorting the wrong stock — a bet its price will fall — is often equivalent to playing Russian roulette, Wall Street-style.

A graphic example is Zoltek Companies, one of the Nasdaq’s more contentious stocks, and a hot 2007 performer that has clobbered the shorts by running up more than 30%.

Depending on whom you talk to, the St. Louis-based manufacturer of carbon fibers falls into one of two categories. It’s a disaster waiting to happen, a shining example of Wall Street hype and bumbling management. Or it’s a dynamic growth company going through the usual trials and tribulations stage, and it will produce a bonanza down the pike.

At least part of this year’s meteoric rise is due to short covering. All told, the company sports a whopping short interest of about 5 million shares.

Next week, Zoltek’s roller-coaster shares could be in for another round of volatile trading as the company reports its results for the first fiscal quarter of 2007, which ended December 31.

The company, which popped up in some of my recent interviews and columns — both in a positive and negative vein — is expected to report modest per-share earnings of between $0.30 and $0.10 a share, with the mean projection $0.70, according to a consensus of analysts’ estimates from Thomson Financial.

Over the near term, it looks like the shorts may be wrong and they could get mauled even more.

The reason: The quarterly bottom line will apparently be more muscular than Wall Street expects — in fact, about twice as much as the consensus estimate. That, at least, is what I got in an interview with Zoltek’s 64-year-old chairman and CEO, the Hungarian-born Zsolt Rumy.

While estimates are all over the lot, Mr. Rumy tells me that a reasonable outlook for the quarter is earnings of $3 million or $0.14 a share on sales of $30 million.

What’s more, he sees a major turnaround from fiscal 2006, which ended September 30, when the company reported a net loss for the year of $65.8 million on sales of $92.4 million. For the current fiscal year, he regards as feasible earnings of some $26 million or $0.75 a share on sales of between $180 million and $190 million.

Earnings, it should be noted, will be free of taxes for several years because of a large tax-loss carry forward.

Zoltek makes carbon fibers that can be used in a variety of applications due to their lightweight, high-strength (stronger than steel), and conductive and corrosion-resistant properties. The largest single user of the company’s products is the aerospace industry. Wind energy, automotive applications (BMW is a customer), and sporting goods such as skis, bicycles, and golf shafts also figure prominently in Zoltek’s revenue stream.

Zoltek, which went public in 1992 at $4 a share (or $1.33, adjusted for a subsequent three-for-one stock split), has turned in a dizzying market performance, later climbing to an all-time high of $65.75 in 1998. In recent years, though, the stock, currently trading at $26.68, has been on a yo-yo, jumping to a 2006 high of $39.34 from a 2005 close of $8.78. It later tumbled to a 2006 close of $19.67, chiefly reflecting a series of earnings and revenue shortfalls.

“For five years, it looked like our concept (to commercialize carbon fibers and turn the business into a much larger volume) wouldn’t work, and our stock ran way above where it should have been,” Mr. Rumy says. Now, though, he contends, “the concept is working, and we’re at the beginning of forming a solid and significant company.”

He likens Zoltek to Alcoa’s growth in aluminum. “We’re going through the same thing 100 years later,” he says. “We’re in a 21st-century product whose time has come.”

Noting that “we just can’t keep up with market demand,” Mr. Rumy says the company is seeking to remedy the problem by significantly expanding its manufacturing capacity — namely, by increasing it to 22 million pounds this year from 13 million pounds last year, particularly in Hungary and St. Louis.

“Our business plan is to reach $500 million in annual sales no later than 2009,” Mr. Rumy says.

Maybe so, but the substantial short position suggests widespread skepticism. Taking note of a series of disappointments, including deferred orders and a breach of contract lawsuit, plus the likelihood of near-term dilutive financing to help finance expansion, some short sellers argue Zoltek’s management lacks credibility. They say any buoyant outlook should be viewed as strictly blue sky.

Mr. Rumy concedes that major hurdles still exist, notably execution and building up management and capacity. Nonetheless, he contends, “the shorts will be disappointed. The business is there, we’re moving along … and we’re for real.”

Veteran money manager Joan Lappin, skipper of Gramercy Capital Management, who met earlier this week with Zoltek’s management, sees the stock reaching $40 by the end of 2008. A key reason is her expectation that the addressable $880 million carbon fibers market will grow between 20% and 25% annually to more than $2 billion by 2010.

dandordan@aol.com