NSOM CHALLENGE:
All China all the time. This will be my third straight contest that all of my picks have been China.
A couple days ago I was going to go short and cash to the max, but I'm more convinced that (at least through the end of the year) the FED will do whatever they can to boost the economy - which would (if successful) have a direct affect on the markets.
Also, I can't win KIK's $100 if I go conservative and I can't win the contest going short.
My overriding criteria is that the chart MUST be near a low - preferably a 52 week low where stabilization has occurred. I'm not really interested in falling knives. The second most important criteria is that whatever news there was that caused the drop has long ago been factored in - even better if there was no bad news at all. Thirdly, good or strong growth trends. Fourthly, low PE based on the most recent quarter or two quarters. Lastly, the particular sector the company in would be a deciding factor. And, as I said, it must be China - where any sector is a good sector.
Once again, I'm picking a B-Team. All China on this one too. It consists of CKGT.ob (Everything Cactus), CPHI.ob (Medicines), TBV (Nutritional Supplements), CHCG.ob (Electronics), GSHO.ob (Steel), DLSL.ob (Solar H20).
Here is my A-Team:
TBYH (Cell Phones): I have picked this in prior PSL's and done well with it. I picked it for my 2007 DD pick and I committed to freezing it at +100%. It got there. I didn't. End of story. Now, it is only +11% on the year. The tremendous growth story is still intact IMO, so although it doesn't do all that well in the 4th quarter, it is overdue for a huge bounce. The PE is 6 and the float is 12M - by far the biggest float of the bunch.
CHME (Organic Medicines): -40% from most recent high. This is a fairly new company, but appears to have good growth. It also has 20 cents in cash (on a $2 stock) and no debt. Probably the best thing about it is that the float is only 1.2M. Anything could make this one explode. PE=10.
ORS (Cell Phones): Even if 500 million people already have cell phones (and they don't), the number of replacement phones has to be astronomical. I love the chart as the stock is -58% off the recent high, but has bounced slightly. Hopefully this is the bottom and whatever bad news there is already factored in. Of course, that's the hope on all these stocks. PE=10. Float 5.6M.
CPSL (Steel): Also a PE of 10. At least until the Olympics next summer, growth will continue to go unabated in China. I doubt they will do much to seriously attempt to slow it. Of course, that just means the bubble will be bigger when it pops. But, in the meantime, anything produced with steel should be good. The chart is very good (-80% off the 52 week high, BUT +32% off the low). And, that is not just a dead cat bounce. The low was over 3 months ago with a steady rise since. Growth has been good. Float 2.7M.
SORL (Auto Parts): Solid financials – strong cash position and very little debt. PE=11. One area that has a LONG ways to go in China is anything auto. The percentage of people that own them is still miniscule. Anything related to it is a great business IMO – at least until the bubble bursts. The stock is -46% off 52 week high, but appears to have stabilized over the last month. Float 2.7M.
CAAS (Auto Parts): Solid financials. Sound familiar? The growth is excellent and the chart is similar to some of the others –48% off the 52 week high, but +17% off the low a month ago. The only downside on this one is the PE is still 23. But, at this point, I think the issue is less about the PE and more about the growth and bounce factor. It could easily get hot again since the float is only 1.8M.
Len
Warren Buffet: 5 minutes and 17 seconds of pure, unadulterated, bulletproof, flawless logic.
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