U.S. listed Chinese stocks likely to rebound Monday, November 28, 2011.
As we all know, China is on course to become the world’s largest economy within the next twenty years making it one of the greatest investment opportunities of the 21st century. However, many investors are wary of investing in China due to its governmental position towards property rights and its arbitrary legal system. From Blue Chip to Penny Stocks, investors have been profiting from China’s growth for years now.
The following list of the top 10 oversold China companies which are listed on various U.S. exchanges:
Trina Solar Limited (NYSE:TSL)
Trina Solar Limited, through its subsidiaries, designs, develops, manufactures, and sells photovoltaic (PV) modules worldwide. The company offers monocrystalline PV modules ranging from 165 watts to 185 watts in power output; and multicrystalline PV modules ranging from 215 watts to 240 watts in power output that provide electric power for residential, commercial, industrial, and other applications.
TSL was down 7.8% on Friday closing at $6.54. Based on brokerage analysts’ average target price of $13.07, TSL’s upside potential is 99.8%. It is trading at 21.0% of its 52-week high of $31.08, and 23.9% above its 52-week low of $5.28.
Suntech Power Holdings Co., Ltd. (NYSE:STP)
Suntech Power Holdings Co., Ltd., a solar energy company, engages in the design, development, manufacture, and marketing of photovoltaic (PV) products. The company also provides engineering, procurement, and construction services to building solar power systems for certain related party and third party customers. Its products include monocrystalline and multicrystalline silicon PV cells; PV modules; and building-integrated photovoltaics products.
On Nov. 25th, STP was the 2nd most oversold Chinese stock listed on U.S. Exchanges. It was down 5.8% on the day closing at $2.29. Based on brokerage analysts’ average target price of $4.43, STP’s upside potential is 93.5%. STP is trading at 21.1% of its 52-week high of $10.83, and 34.7% above its 52-week low of $1.70. The potential for this penny stock is surely worth adding to any investor’s watch list.
ReneSola Ltd. (NYSE:SOL)
ReneSola Ltd, together with its subsidiaries, engages in the manufacture and sale of solar wafers and solar power products. It offers virgin polysilicons, monocrystalline and multicrystalline solar wafers, and photovoltaic cells and modules. The company also provides cell and module processing services. Its products are used in a range of residential, commercial, industrial, and other solar power generation systems. The company sells its solar wafers primarily to solar cell and module manufacturers.
SOL was down 5.4% on Friday closing at $1.76. SOL was the 3rd most oversold Chinese stock on Nov. 25. Based on brokerage analysts’ average target price of $2.86, SOL’s upside potential is 62.6%. It is trading at 13.3% of its 52-week high of $13.25, and 20.5% above its 52-week low of $1.46. SOL is another Penny Stock worth adding to the watch list.
Hollysys Automation Technologies Ltd (NASDAQ:HOLI)
Hollysys Automation Technologies Ltd. provides automation and control technologies and applications to customers in the industrial, railway, subway, and nuclear industries in China and south-east Asia. It offers distributed control systems, which are networks of controllers, sensors, actuators and other devices that can be programmed to control outputs based on input conditions and/or algorithms; programmable logic controllers that are small computer devices installed on machines or equipment; and train control centers (TCC), which monitor route condition, track status, train schedules, distance between trains, and the working status of other essential function devices.
Closing at $8.35, HOLI was the 4th most oversold Chinese stock on Nov. 25. It was down 5.1% on the day on volume of 74,652. Based on brokerage analysts’ average target price of $13.13, HOLI’s upside potential is 57.2%. It is trading at 46.0% of its 52-week high of $18.15, and 83.9% above its 52-week low of $4.54.
Seaspan Corporation (NYSE:SSW)
Seaspan Corporation owns and operates the containerships that are engaged in the deep-sea container transportation business in Hong Kong. The company charters its containerships pursuant to long-term, fixed-rate time charters to various container liner companies.
SSW, the 5th most oversold Chinese stock on Nov. 25, was down 4.2% on Friday closing at $10.61. Based on brokerage analysts’ average target price of $18.00, SSW’s upside potential is 69.7%. It is trading at 49.7% of its 52-week high of $21.33, and 3.9% above its 52-week low of $10.21.
Yingli Green Energy Hold. Co. Ltd. (NYSE:YGE)
Yingli Green Energy Holding Company Limited, together with its subsidiaries, engages in the design, development, manufacture, marketing, sale, and installation of photovoltaic (PV) products in the People’s Republic of China and internationally. The company offers PV cells, PV modules, and integrated PV systems, as well as polysilicon ingots, blocks, and wafers.
Coming in at 6th for the most oversold Chinese stock on Nov. 25, YGE closed at $3.81. YGE was down 3.8% on volume of 2,203,054. Based on brokerage analysts’ average target price of $5.29, YGE’s upside potential is 38.8%. YGE is trading at 28.0% of its 52-week high of $13.59, and 38.5% above its 52-week low of $2.75. Perhaps not the best potential return you can get on a penny stock, YGE is still noteworthy of adding to the watch list.
E-House (China) Holdings Limited (NYSE:EJ)
E-House (China) Holdings Limited, through its subsidiaries, operates as a real estate services company in China. It provides primary real estate agency services, secondary real estate brokerage services, real estate information and consulting services, real estate advertising services, real estate promotional event services, real estate online services, and real estate investment fund management services. The company offers primary real estate agency services to real estate developers.
EJ closed Friday at $5.59 making it the 7th most oversold Chinese stock on U.S. Exchanges. EJ was down 2.8% on volume of 237,208. Based on brokerage analysts’ average target price of $10.97, EJ’s upside potential is 96.3%. EJ is trading at 34.4% of its 52-week high of $16.25, and 11.8% above its 52-week low of $5.00. The profit potential on EJ can be a good one so add this also to your watch list also.
ZHONGPIN INC. (NASDAQ:HOGS)
Zhongpin Inc. engages in the processing and distribution of meat and food products primarily in the People’s Republic of China. The company provides pork and pork products, such as chilled pork, frozen pork, hog by-products and variety meats, and prepared meats; and vegetable and fruit products, including asparagus, sweet corn, broccoli, mushrooms, lima beans, strawberries, and capsicums. It sells its products fast food companies, processing factories, school cafeterias, factory canteens, hotels, army bases, and government departments, as well as directly to retail outlets, including supermarkets.
Closing at $9.39 on Friday, HOGS is the 8th most oversold Chinese. HOGS was down 2.2% on very lite volume of 75,307. Based on brokerage analysts’ average target price of $15.92, HOGS’s upside potential is 69.5%. HOGS is trading at 44.6% of its 52-week high of $21.07, and 42.3% above its 52-week low of $6.60.
VanceInfo Technologies Inc. (NYSE:VIT)
VanceInfo Technologies Inc., together with its subsidiaries, engages in providing information technology (IT) consulting services. The company provides research and development services in various phases of development, including requirements analysis, concept generation, product realization, quality assurance and testing, and technology and information transfer; and develops various software products comprising middle-wares, Internet protocols, and other software.
VIT closed Friday at $9.10 making it the 9th most oversold Chinese stock on U.S. Exchanges. VIT was down 2.2% on extremely lite volume of 192,437 for the day. Based on brokerage analysts’ average target price of $18.24, VIT’s upside potential is 100.5%. It is trading at 22.2% of its 52-week high of $41.06, and 47.0% above its 52-week low of $6.19.
Qihoo 360 Technology Co Ltd (NYSE:QIHU)
Qihoo 360 Technology Co. Ltd. provides Internet and mobile security products in the People’s Republic of China. Its principal products include 360 Safe Guard, an Internet security product for Internet security and system optimization; 360 Anti-Virus, an anti-virus application to protect users’ computers against trojan horses, viruses, worms, adware, and other forms of malware; and 360 Mobile Safe, a security program for the Google (GOOG) Android, Apple (AAPL) iOS, and Nokia (NOK) Symbian smartphone operating systems.
QIHU closes up the top 10 list of most oversold U.S.-listed Chinese stock on Nov. 25. QIHU closed at $15.64, down 2.1% on the day, on volume of 464,262. Based on brokerage analysts’ average target price of $34.07, QIHU’s upside potential is 118.0%. QIHU is trading at 43.2% of its 52-week high of $36.21, and 9.3% above its 52-week low of $14.30. Any stock, penny stock or mid-cap, with a 118% profit potential is worth adding to the watch list.
Think laterally if you want invest and profit from China’s growth with U.S. listed Chinese companies. As an alternative to buying shares in Chinese companies, investors can still get a piece of the pie by investing in non-Chinese firms which do business in China, with China, or which move cargo to and from China. If the word China shows up, it’s worth looking into.
3 Alternatives to Investing In China
1. Companies doing business within China
The Chinese consumer loves the ability to embrace American culture. For that, many foreign firms operate in China. Nevertheless, only a couple of them few are making any real money there. Breaking into the Chinese market isn’t as easy as you might think. One U.S. listed company that is doing very very well is the Kentucky based YUM! Brands, Inc. (YUM). YUM closed Friday at $52.72 which is right within the median of its 52 high-low of $46.27 – $57.75. YUM operates approximately 37,000 restaurants in 110 countries and territories under the KFC, Pizza Hut, Taco Bell, Long John Silver’s, and A&W All-American Food Restaurants brands.
In China, the YUM revenue line is all about KFC. KFC has been in China since 1987 and today it has over 3,200 outlets in China. YUM’s Chinese division is opening more than one new KFC a day, putting it on course to have over 10,000 by 2020. In 2010, 42% of YUM’s operating profit came from China, a rise of 27% compared to 2009. It’s extremely likely that by 2020 YUM business will be revenue dominated by China. YUM has been a success because it tailored its business to the Chinese consumer market where KFC is seen as a restaurant instead of a fast food outlet. Their main competitor, McDonald’s (MCD), has been far less successful in China due in part because it has kept the same model that it uses elsewhere.
2. Companies which do business with China
With the growing needs of China, giant multi-national mining companies such as BHP Billiton (LSE: BLT), Rio Tinto (LSE: RIO) and Xstrata (LSE: XTA) do lots of business with China. The amount of business is such a large amount of their revenue base that their share prices are very sensitive to changes in the Chinese economy. China is well known as world largest consumer of base metals. Since growth is not likely to slow down anytime soon, it is set to keep on growing for some time to come. With the possibility of a few bumps in the road along the way, this continuation of growth will keep the miners busy.
There’s going to continue to be much more demand from China and India as well in the next 25 years as they continue to develop. Understanding that growth projection, it’s seems well worth investing in a few mining shares for the long term. Even though the mining companies had a good run in the last few years, those such as BHP Billiton are still on a prospective P/E ratio for 2011 of less than 10.
3. Companies getting goods and raw materials in and out of China
China imports an enormous amount of food and raw materials with a large proportion of this coming from America and Canada. There’s plenty of business in getting these supplies to China. As a result, the North American railroads, with access to the west coast ports, have increasingly become a more than attractive investment. The railroads are going to get the majority of the business since it’s cheaper to move bulk shipments by rail rather than truck, especially when oil prices are high. Additional opportunities are in place to make a lot of money by transporting Chinese goods from the west coast ports. The preferred investments in these railroads are Canadian Pacific Railway Limited (CP) and Union Pacific Corporation (UNP). The other two U.S. listed companies with major west coast railroad interests are Warren Buffett’s conglomerate Berkshire Hathaway (BRK-A), which owns Union Pacific’s main competitor, the Burlington Northern Santa Fe (BNSF) railroad, and the Canadian National Railway (CNI).
In the investment world, you never stop learning! One thing about railroads: Ever since Warren Buffett drew the world’s attention to them by buying BNSF, many investors have bought European railway shares assuming they would have similar strengths. They don’t. The railroads in North America and Europe operate in completely different markets. The American and Canadian rail business is all about medium and long-distance freight traffic. Contrarily, European railways mostly move nothing more than passengers. Rail freight in Europe doesn’t have any cost-advantage over trucks because of the relatively small distances that are travelled.