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Welcome to Profit Confidential • Monday, May 21, 2012

A Healthy Break for Long-Run Action

Wednesday, June 20th, 2007
By Mitchell Clark, B.Comm. for Profit Confidential

Among many stocks that I’ve discovered, I’m particularly pleased with New Oriental Education & Technology Group Incorporated (NYSE/EDU). This China-based company has done exceptionally well since going public last September. The stock has doubled in the last nine months, and although it’s now expensively priced, I think it will keep ticking higher.

This stock just had all the right attributes, and the timing was right because the market was very much interested in U.S.-listed Chinese companies. When you find a winner, it can really pay to stick with it. The stock just broke through the $50.00-per-share level.

Most U.S.-listed China stocks are down from their highs. They haven’t had the fervor they previously had. This is mostly due to Chinese authorities trying to take the wind out of an overheated stock market. Although it hurts if you own these stocks, a break is healthy for the long-run action of these securities.

A lot of Chinese solar energy stocks have also pulled back significantly in recent weeks. For the most part, I believe that these stocks will recover, because the production of solar energy components in China is booming. The vast majority of global demand for solar energy products is in Europe, and China is still the lowest cost producer that can handle the increasing capacity.

Although volatile, China solar energy stocks make attractive speculative investment opportunities, because you just can’t find the growth elsewhere.

So, I’m really looking forward to second-quarter earnings season. The market also wants to hear about corporate news, rather than just raw economic numbers.

Inflation is still the number-one risk to the health of the stock market this year, and I don’t know how it’s going to play out. I’m very much hoping that current interest rate levels are enough to keep inflation under control. The price of oil and gasoline, however, just doesn’t seem to want to go down. Inflation is an economic measure that you cannot predict.

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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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