Best China Micro-caps on the Market

[kuwlness]

US Indices continuing the lower low / lower high pattern. China stocks holding their own and none of the ones I follow (except RINO) have followed the US pattern.

Maybe the fundamental divergence is starting to occur before our eyes. The HAO tracks China Small Caps and closed close to its support yet still higher than where it was last week even in the face of one of the nastiest sell-offs in over a year.

My favorite stocks have gotten pummeled. They were getting close to fair value, some even as high as PEs of 10, now they've gotten beat back down to PEs of 3-5. Will they go back to PE's of 1-2?? I hope so ... hell, I'll take a second mortgage on the house to buy more. I say bring on the cheapies, I'll take 'em.

:toast:

 

[kuwlness]

Nice unemployment number. However, I do not expect a rally today, or at least not much of one. Big money is sitting out for the time being. Maybe they're waiting for a 10% correction (we're at 7% now from our highs) ... maybe they're waiting for more of a correction.

Regardless, this is worth noting:


One of the biggest bears, Doug Kass, said he was now net long ... very unusual to see a huge bear get long the markets.


I dont expect this to turn the markets, but it's worth knowing.

 

[kuwlness]

S&P 1030 is where I'm expecting the down-trend to stop. We have a head and shoulders pattern on the S&P and we're forming the right shoulder now. 1030 is the neckline. We might get some type of bounce off of 1050, but it'll be short-lived imo.

Save some dry powder for 1030 and let 'em have it.

 

[kuwlness]

DOUG KASS:

Kass: Greed Might Get Good Again
http://www.thestreet.com/story/10675647/2/kass-greed-might-get-good-again.html

"For these reasons and others, I view the yesterday's panic as a likely nearing of the end to the market's correction rather than the beginning of a much larger selloff or bear market.

It will soon be time to be greedy when others are fearful."

 

[kuwlness]

Emerging Stock Funds Losses Show Repeat of ‘04 Rally
By Michael Patterson

Feb. 8 (Bloomberg) -- The biggest tumble in developing- nation stocks in 11 months is making investment strategists at Morgan Stanley, Credit Suisse Group AG and Goldman Sachs Group Inc. as bullish as ever.

Morgan Stanley’s Jonathan Garner predicts the MSCI Emerging Markets Index will surge 34 percent by the end of 2010 as corporate profits jump 40 percent. Sakthi Siva of Credit Suisse says declines in the 22-country gauge may be limited to 5.3 percent. Goldman’s Thomas Deng recommends investors buy in China, where he forecasts the CSI 300 Index will gain 36 percent in the next 10 months.

Continued here: http://www.businessweek.com/news/20...-losses-show-repeat-of-04-rally-update2-.html



I also have Goldman Sachs' February Reports on China that go into more detail than the above article. Please PM me your email address if you'd like to take a look at their latest reports. To sum it up, they basically say buy this pull-back because it's probably your last chance to get in this cheap.

 

[kuwlness]

CNAM - China Armco

Up-listing to the NYSE AmEx tomorrow. Buy it today and sell it tomorrow or Thursday for a 15-25% gain ... think CWS on 12/22. You can play these up-listing pops for upwards of 50% in some cases. CNAM has been one of my favorites for a while, and I intend to add to my position today on this news and sell after the up-listing.


http://finance.yahoo.com/news/China-Armco-Metals-Approved-iw-1384688239.html?x=0&.v=1

 

[ANOTHERDAY]

CNAM - China Armco

Up-listing to the NYSE AmEx tomorrow. Buy it today and sell it tomorrow or Thursday for a 15-25% gain ... think CWS on 12/22. You can play these up-listing pops for upwards of 50% in some cases. CNAM has been one of my favorites for a while, and I intend to add to my position today on this news and sell after the up-listing.


http://finance.yahoo.com/news/China-Armco-Metals-Approved-iw-1384688239.html?x=0&.v=1

Hopefully XODGE gets moving and goes up and up

 

[kuwlness]

Hopefully XODGE gets moving and goes up and up

XODGE needs to file their 10Q ... i realize they replaced their CFO, but this is getting ridiculous. They announced some big contracts for 2010 too, someone needs to ~~:<<

If they haven't filed it by Thursday, it might be best to cut losses until they file their report. I averaged down a bit in the .70s too ... hno:

 

[kuwlness]

Earnings Run-Down

Here's a summary of approximate earnings date for most of the stocks I've mentioned here:


14 Feb. for 10Qs
CHIO CPBY CSOL CYXN GHII JADA LPIH

17 Mar. for 10Qs (out of cycle)
LLEN

31 Mar. for 10K
ALIF BSPM CCGY CCME CGDI CHME CKGT CNAM CPQQ CWS FEEC LTUS NEP ONP PUDA SGZH RINO TSTC YUII ZSTN

:toast:

 

[FadeMeToWin]

May be a mistake, but i am back. Dont know how long before i am out again.

 

[ANOTHERDAY]

XODGE needs to file their 10Q ... i realize they replaced their CFO, but this is getting ridiculous. They announced some big contracts for 2010 too, someone needs to ~~:<<

If they haven't filed it by Thursday, it might be best to cut losses until they file their report. I averaged down a bit in the .70s too ... hno:

Sell all (xodge) Thursday if no rise? Thanks

 

[kuwlness]

Sell all (xodge) Thursday if no rise? Thanks

It's your call, I'm holding until the filing either way, but I'm not happy and have voiced my concern with investor relations. Hopefully someone lights a fire under their azz and gets them to file their 10Q. Will keep the board posted.

 

[kuwlness]

May be a mistake, but i am back. Dont know how long before i am out again.

Welcome back.

 

[ANOTHERDAY]

It's your call, I'm holding until the filing either way, but I'm not happy and have voiced my concern with investor relations. Hopefully someone lights a fire under their azz and gets them to file their 10Q. Will keep the board posted.

I'll wait it out with you

 

[kuwlness]

JADA

Loaded the snot out of this little gem that's been thrown by the way side. Would be surprised if this isnt back in the .50-.70 range over the next few weeks/month ... easy double.

 

[kuwlness]

JADA -- nice move off the lows.

BSPM -- 8% move on no news? WTF, I thought the market was still correcting. And that's why you can't call a bottom, never know when someone that realizes value is gonna come out and start buying. Although, it was on light volume, lets see how the rest of the week plays out.

CCME -- tick-tock, tick-tock. In case you dont have ears that are capable of hearing the extremely high-pitched sound of a vacuum sucking up all the float, that's what's going on here. I'm expecting another huge move here very, very soon.

For comparison, check out VISN and FMCN ... both are in the same industry as CCME, yet they trade at PEs of 17 (they previously traded at PEs over 20 before the correction). Just wait til CCME gets the same valuation (which it will in time) ... low-end I'm looking at $25, but I wouldnt be surprised to see it over $30 later this year and well into the $40s next year.

 

[kuwlness]

Dont really care for Cramer / CNBC, but today's Cramer segment is worth watching as it pertains to China:

http://www.cnbc.com/id/15840232?video=1410219841&play=1


Today's China Headlines:

China's Stocks Advance as Inflation Data Cools Rate-Increase Speculation
China’s stocks gained for a third day, led by automakers and steelmakers, after consumer prices rose less than estimated, bolstering speculation the central bank will delay raising interest rates.
http://www.bloomberg.com/apps/news?pid=20601089&sid=aUc09gt4_H.4

China’s Jan. New Loans 1.39 Trillion Yuan
Feb. 11 (Bloomberg) -- China’s January new loans stood at 1.39 trillion yuan, the central bank said.
http://www.bloomberg.com/apps/news?pid=20601089&sid=aWgta2h0NMNM

China May Raise Interest Rates This Quarter, RBC Says
Feb. 11 (Bloomberg) -- China may raise interest rates before the end of March as accelerating economic growth prompts the central bank to tighten monetary policy, according to Royal Bank of Canada’s emerging-market strategist Brian Jackson.
http://www.bloomberg.com/apps/news?pid=20601089&sid=aWgta2h0NMNM



Futures are up HUGE on the China inflation news ... sweet, rally tomorrow!!
http://www.bloomberg.com/markets/stocks/futures.html

 

[kuwlness]

These have nothing to do with China, but I got in the following today:

CVM -- been a while, rode this to $2, now .50, lmao

CYCC -- big cancer news on the horizon, I'm in.

DEAR -- US Bank that made .55 EPS last Q ... if they can continue to turn a profit, fair value is around $5.50-$6.50

 

[brownman]

hey kuwl, i know you posted an upadate on when earnings will be annoucned for a few of the china stocks we have been talking about but had a question on ckgt and cws. CWS has had a nice run the last few days but cant seem to break the 6 barrier, do you see any action before earnings? Whats the deal with ckgt, after that good news about the cactai smokes its not doing much, any help?

 

[kuwlness]

hey kuwl, i know you posted an upadate on when earnings will be annoucned for a few of the china stocks we have been talking about but had a question on ckgt and cws. CWS has had a nice run the last few days but cant seem to break the 6 barrier, do you see any action before earnings? Whats the deal with ckgt, after that good news about the cactai smokes its not doing much, any help?

CKGT is one of my all-time favorite stocks. I've been in this little guy since .45 and I bought a bunch in the $2.20s (and higher of course) over the last few weeks. I expect EPS in the range of .75-.90 in 2010. I also anticipate up-listing in 2010, so it'll get to at least a 7PE (worst case), but possibly as much as a 12PE, after up-listing. You can do the math. CKGT is my #3 holding right now (#1 = CCME, #2 = BSPM).


CWS I'm not too bullish on right now. There have been several articles about Windpower in China recently and none of them are moving the stock right now. Often times when a stock has the run CWS had after up-listing, it usually trades sideways for a little while. YUII sat at $6 after up-listing for over a month, then bam shot to $11+ out of no where. I think CWS will be good long-term though, I just dont think there is as much up-side as in other names, but it'd be hard to lose money over the long-term. CWS is a less than 2% holding for me.


Remember, I prefer a basket approach with 20-30 stocks that I dont see myself losing money on over the long-term. These stocks are what most would call "high-beta" stocks. They can be volatile, but if you know what you own and you dont let the market try to tell you what they're worth, you'll do great in the long run.

After China earnings season (early April), I'll come out with updated 2010 price targets for all the stocks mentioned here.


And dont be like the bears/shorts that all panicked today and ;+)-

... TSTC comes to mind, hahaha ... burn shorty, burn!