Still on the subject of Chinese stocks, the carnage on the stock
market has been so pervasive that a lot of U.S.-listed Chinese stocks
are now worth looking at. You still have to be very careful with this
group, and I think it’s reasonable to say that you only want a small
amount of exposure in the portfolio sense. The reason for this is in
case the numbers are cooked, or an executive is doing something with
the company’s assets that shareholders don’t know about. Confidence is
just
one of the risks you have to balance with Chinese stocks.
One company that I think is worth following now is Renren Inc.
(NYSE/RENN), which has been going down on the stock market ever since
it was listed. The company has approximately $2.30 a share of cash in
the bank and, like most Chinese stocks, has no debt.
Renren is a social networking company providing a number of Internet
platforms for users in China. The company is a serious growth story,
but is still dealing with operating losses as it invests in its
different web sites. Renren’s stock market chart is below:
Another Chinese stock with excellent turnaround potential is
E-Commerce China Dangdang Inc. (NYSE/DANG), which is another company
bouncing off its all-time low on the stock market. This firm is kind of
like an early-stage Amazon.com, Inc. (NASDAQ/AMZN) in that it operates
an e-commerce web site selling books and general merchandise. The
company isn’t yet profitable, but it’s growing like mad. Revenues in
2009 were just over $200 million. This year, they are expected to be
over
$800
million. The company’s stock market chart is featured below:
For the most part, institutional investors have left Chinese stocks,
and this void has created a lot of opportunity. But, what is very
difficult to estimate is what you might be able to expect in terms of a
return on your investment. Anything can happen to these kinds of
stocks, even the fastest growing companies. That’s why Chinese stocks
are only for risk-capital play money. They’ve proven to be that risky.
The U.S. stock market is trending a little higher these days on
hopes for policy solutions regarding the fiscal cliff. There really
isn’t much other reason why the stock market should be moving up. The
key over the near term for domestic equities is fourth-quarter earnings
season. Oracle Corporation (NASDAQ/ORCL) always reports early among
technology stocks, and the company recently beat the Street with its
numbers. Earnings expectations for the last quarter of 2012 came down
so
much
that we could be in for a number of “surprises” among all the managed
earnings. Still, surprise or not, the growth isn’t that robust. I don’t
expect anything from the broader stock market in 2013. Chinese stocks
are their own group.
No comments:
Post a Comment