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Welcome to Profit Confidential • Monday, May 21, 2012

A Chinese Favorite Rockets Higher

Monday, October 1st, 2007
By Mitchell Clark, B.Comm. for Profit Confidential

Remember Fushi International, Inc. (NASDAQ/FSIN)? We talked about this company twice over the last month and the stock has now taken off with bang.

This Chinese company is in the business of manufacturing bimetallic composite wire products. The company’s core product is copper-clad aluminum wires that combine the conductivity and corrosion resistance of copper, with the light weight of aluminum. According to Fushi, its copper-clad aluminum wires are a cost- effective substitute for single copper wire. They can be used in a variety of applications, such as coaxial cable for cable television (CATV), signal transmission lines for telecommunication networks, distribution lines for electricity, electrical transformers, and wire components for electronic instruments and devices.

Most of this company’s business is in China, but it just announced a material acquisition in the U.S. and this is why the stock popped higher.

Fushi plans to acquire 100% of Copperweld Bimetallics, LLC, which is based in Fayetteville, Tennessee. This firm manufactures bimetallic wire — mainly copper-clad steel (CCS) and copper-clad aluminum (CCA). The company sells to communications, utility, transportation, and industrial customers and has a second manufacturing location in Telford, England. According to Fushi International, the company has approximately 130 employees and generated revenues of approximately seventy million dollars in last 12-month period.

Fushi is getting this company for only twenty-two and a half million dollars, including the assumption of debt. This leads me to believe that the company being acquired isn’t profitable. But, if it’s one thing the Chinese are good at, it is lowering costs.

This acquisition will effectively double Fushi’s size and the stock market liked the news because the stock popped up by four dollars per share. When I first wrote about this company at the end of August, the stock was trading between $11.00 and $11.50 per share. The stock just hit $15.80 per share and, like many China stocks, is now garnering a higher profile within the investment community.

Fushi International is another winning Chinese stock that I think will continue to be very successful over the coming quarters. It really is exciting to see all the action in China stocks.

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Profit Confidential AuthorMitchell is a Senior Editor at Lombardi Financial specializing in small-cap stocks. He’s the editor of a variety of popular Lombardi Financial newsletters, such as Penny Stock Reporter, Micro-Cap Stocks, and Monster Profits. Mitchell, who has been with Lombardi Financial for thirteen years, won the Jack Madden Prize in economic history and is a long-time student of equity markets. Prior to joining Lombardi, Mitchell was as a stock broker for a large investment bank. While Mitchell is not working he enjoys fly fishing, motorcycling and tending to his hobby farm.

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