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Welcome to Profit Confidential • Wednesday, May 23, 2012

Will this Great Stock Turn Around?

Thursday, April 10th, 2008
By Mitchell Clark, B.Comm. for Profit Confidential

While some U.S.-listed Chinese stocks are enjoying renewed enthusiasm from investors, many are not doing anything in this market. Business is great, but most investors still don’t have the appetite right now for highly speculative securities. This is not a surprise.

Case in point: Focus Media Holding Limited (NASDAQ/FMCN). This is one exciting company that is uniquely positioned in an industry that is flourishing in Asia.

I first wrote about this company in this column back in November 2006 and have been following it ever since.

Focus Media runs the largest advertising network in China, using flat-panel screens in all kinds of places from supermarkets to elevators. The company’s televisions provide the platform for big corporate customers to advertise directly to a wealthier, white-collar target market. Some of the company’s customers include Motorola, P&G, China Telecom, and Toyota.

November of last year was a turning point for the broader stock market, and for many U.S.-listed Chinese stocks like Focus Media. At that time, Focus Media hit a new record high of a split-adjusted $66.30 per share, more than double its price from a year earlier. Not surprisingly, this stock pulled back significantly with the correction and is now trading around $37.00 per share.

Of course, the company’s fundamentals haven’t changed and thestock didn’t move lower because of lots of selling. It pulled back more so from an absence of buyers.

The thing about investing in speculative stocks is that you never really know if or when the stock will take off. A company like Focus Media is an innovator in its industry and its stock is now much more attractively priced. The only question is: will the stock turn around? And if so, when?

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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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