A Look at a Great Chinese Stock
Monday, September 10th, 2007
By Mitchell Clark, B.Comm. for Profit Confidential
I would say that just about everyone on Wall Street has no idea what is going to happen to the stock market over the next month or so. Normally, a lot of seasoned investment professionals have a gut feel as to the near-term direction of stock prices (barring any major shocks) but, in today’s environment, all bets are off.
This makes it particularly dangerous for individual investors because a lot of institutional investors are jittery. The stock market isn’t so worried about inflation anymore, as the credit market is still very much the major issue right now.
So, I guess I’ll repeat my view that I’m reluctant to be a buyer of stocks in this market, but I do recognize a lot of great companies out there.
One company that looks very interesting in this market is Fushi International, Inc. (NASDAQ/FSIN). I mentioned this company last month in this column. The stock has just graduated from the Over-The-Counter Bulletin Board to the NASDAQ.
As with most industries in China, business is booming. If you’re a company in China that’s in the business of selling transmission lines for telecommunication networks, you’ll know that the cost of metal is rising.
Fushi International came up with this product that it calls “bimetallic composite wire.” It is a copper and aluminum wire that combines the conductivity and corrosion resistance of copper with the light weight of aluminum. Fushi is selling this wire to a broad range of industries in China, and its latest quarter yielded a 42% rise in revenues.
In its recent second quarter of 2007, the company’s revenues grew 42% to more than twenty-six million dollars. Revenues were driven by a four-percent increase in the average selling price of product sold and a 37% increase in the total volume of bimetallic product sold. Coaxial cable accounted for approximately 59% of sales, magnet wire was 16% of sales, and shielding wire accounted for approximately 25% of total revenues.
Net income in the second quarter of 2007 was $7.0 million, or about the same as net income of $7.2 million generated in the second quarter of 2006. The company finished the quarter with seventy-five million dollars in cash and it wants to acquire other companies going forward.
A story like Fushi International isn’t sexy, but it is a reflection of China’s economic growth. I think this company will be a big success over the next several years.
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Tags: china, China's Growth, chinese stocks, stock analysis
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Mitchell 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.
