Solid Growth
Monday, December 18th, 2006
By Mitchell Clark, B.Comm. for Profit Confidential
One of my favorite China-related stocks, LJ International Inc. (NASDAQ/JADE) announced that it filed a universal shelf registration statement with the Securities and Exchange Commission (SEC).
Once approved, this essentially gives the company permission to go ahead and raise money in any fashion it wants. It could be in the form of an equity issue, a preferred share offering, or warrants.
LJ said that it filed for permission to be able to offer up to $100 million in new capital. Clearly, the company is getting ready for a new expansion and/or some kind of acquisition.
I really like this little company. It’s been fortunate in its business operations, but also on the stock market, where some in the investment community have rallied around the story. Being a very small company, this stock is still below the radar screen of most on Wall Street.
At its current price of approximately $4.40 per share, this stock is reasonably priced. When I first wrote about this company in this column back in July, the stock was trading around the $4 per share mark.
Company management previously mused about selling its retail jewelry division in China, but that would be a real mistake in my view. The whole reason why this stock has been successful to date is precisely because of its China market business plan. I hope the company realizes this going forward.
In its latest quarter, the third quarter of 2006, LJ’s revenues grew 25% to 33.2 million. Net income was $2.1 million, or $0.12 per share. This small company’s growth isn’t earth shattering, but it is solid. More often than not, I prefer these kinds of companies. That is, those companies delivering consistent, more stable growth, as opposed to one-time wonders. I’d say LJ International is well positioned for the future.
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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.
