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Welcome to Profit Confidential • Tuesday, May 22, 2012

What I Like to See from a Small-cap Company

Monday, January 15th, 2007
By Mitchell Clark, B.Comm. for Profit Confidential

When it comes right down to it, business is all about making progress. Some progress is always better than no progress, and major progress is what makes investors enthusiastic about a stock. One particular company that I’ve written about at length in this column is China’s LJ International (NASDAQ/JADE) — a designer and seller of a full range of jewelry. This small company is making excellent progress, expanding its business in a diligent and profitable manner.

The company distributes its products to fine jewelers, department stores, and national jewelry chains in North America and Europe, as well as making serious inroads in the Chinese market with its own retail jewelry chain, ENZO.

Still reasonably priced on the market, the company’s stock just hit a new 52-week high.

Recently, the company announced that it had exceeded its goal for new ENZO store openings in China, Hong King, and Macau. As of the end of 2006, the company had 42 ENZO retail stores open — on track to meet its goal of having 100 stores open by the 2008 Beijing Olympics.

The company cited that its ENZO retail division is now generating an operating profit, and management expects to achieve full net profits by the end of 2007. The company’s 2008 goal for its ENZO division is to generate $40 million in revenues with full bottom- line profitability.

When I first wrote about this stock in July of last year, the stock was trading around $4 per share. Today, the stock is trading just under $5 per share and is still very reasonably priced on the market.

I really like LJ International as a company because it continues to set goals for itself. Once it achieves a goal, it sets its sights on a new target and issues progress reports to the market on a regular basis. This is exactly what I like to see from a small-cap company.

 

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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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