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Welcome to Profit Confidential • Tuesday, May 22, 2012

Chinese Companies Are Growing Quickly

Thursday, January 24th, 2008
By Mitchell Clark, B.Comm. for Profit Confidential

I’m still very cautious about the state of the stock market, but a lot of people I know are much more aggressive in their speculating than I am. I’ve been watching a lot of Chinese stocks go down significantly, and it makes me think that a number of these stocks are good buys at their current prices.

Of course, Chinese stocks, whether they are listed on U.S. stock exchanges or not, are inherently high-risk securities. Significant volatility in Asian financial markets is par for the course, and you have to have a high tolerance for price swings if you’re going to be a speculator in Asian equities.

With this in mind, the good news is that there is significant growth to be had. You just can’t find small-, medium- or even large- cap companies that are growing as fast as they are in China.

One company that I like very much is Wonder Auto Technology, Inc. (NASDAQ/WATG), which is down about three points from its recent high. This company is based in Jinzhou City, Liaoning, China, and operates a number of subsidiaries that design and manufacture automotive electrical parts and suspension components. In 2006, the company ranked second in sales of automotive alternators and starters in the Chinese market.

The company currently sells five different series and over 150 models of alternators, 70 models of starters and various suspension-related parts, supplying a number of auto makers, engine producers and auto-parts suppliers in China and abroad. Some of the company’s customers include Beijing Hyundai Motor Company, Shenyang Aerospace Mitsubishi Motors Engine Manufacturing Co., Ltd., Harbin Dongan Automotive Engine Manufacturing Co., Ltd. and Tianjin FAW Xiali Automotive Co., Ltd.

The company recently opened an office in Detroit, MI, and hired a former executive from Delphi to get things up and running. Whether we like it or not, because of China’s extremely cheap labor costs, industrial companies like Wonder Auto Technology are going to be a force to be reckoned with.

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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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