This past week we have been very bullish on Chinese-based stocks with small floats, particularly after the huge runs seen on Yulong Eco-Materials Limited (YECO), China Ceramics Co., Ltd. (CCCL) and The9 Limited (NCTY) in the previous week. YECO ran from $1.52 to a high of $17.87 on news of a completed acquisition that was first announced weeks ago. China Ceramics Co., Ltd. (CCCL) followed up with a 200% move out of nowhere on October 18 and The9 Limited (NCTY) with a 400% spike on the morning of October 19. We think China Recycling Energy Corporation (CREG) will be the next one to have a substantial break out based on very positive technicals and fundamentals that support a higher price. We are up to 720 followers despite not giving out a lot of alerts, a fact that we think is indicative of a successful, diligent and prudent stock picking history. If you like our picks you can follow our blog by clicking the follow button on the top of the left hand panel. You can also follow us on Twitter @StockTradePicks. We have over 3,000 followers on Twitter as well.
On Friday YECO was hot once again, rising 66% on 15 million of volume. This had a positive impact on CREG which shot up 20%, with most of that being in the last hour of trading. What makes CREG such a good candidate for a spike like YECO? Two reasons. First, CREG has a small float just like YECO. Second, CREG is fundamentally undervalued based on the assets held on the balance sheet. About a year ago CREG spiked from a little over $1.00 to over $9.00 out of nowhere. We think the conditions are right for that to happen again.
Let's review finviz data for CREG:
The key metrics to look at are:
Book value per share of $24.12
Cash per share of $7.81
P/B of 0.07
P/C of 0.20
P/FCF of 5.11
Shares outstanding 8.36 million
Float 5.56 million
Short float 3.95%
CREG has a book value per share of $24.12 and cash per share of $7.81, both substantially higher than its stock price of $1.59. This results in a price to book ratio of just 0.07x and price to cash ratio of 0.20x. Let that sink in for a second, CREG is trading 5 times lower than its cash balance. This stock would need to increase 5x just to come in line with the cash it has on its balance sheet and about 15x just to come in line with its book value.
Finviz doesn't recognize any revenue for CREG, but that is actually not true. It has a sales lease business model in which it records all of its income as interest income. The clue here is the P/FCF metric. While Finviz doesn't record any "revenues", it recognizes that it is generating free cash flow, and that its is trading at just 5 times its FCF.
CREG's share float is 5.56 million on outstanding shares of 8.36 million with a relatively low short interest of just under 4%.
Now let's look at finviz data for YECO:
The key metrics to look at are:
Book value per share of $1.54
Cash per share of $0.37
P/B of 4.66
P/C of 19.26
P/FCF N/A
Shares outstanding 4.56 million
Float 1.09 million
Short float 2.45%
YECO has a book value per share of $1.54. Prior to its big move, it was actually trading at book value. The Millennium Sapphire deal closes for $50 million by issuing 25 million shares at $2.00. So book value per share will remain in the $1.50 to $2.00 range even after consolidation of the businesses. The rest of the value metrics do not compare as YECO has very little cash on its balance sheet and does not generate FCF.
The point of comparing CREG's fundamentals to YECO is to show that YECO was trading at higher ratios even prior to its move. The knock against CREG would be that it is a Chinese company and that they should trade below book value, which is clearly not the case with YECO. And even if CREG deserves to trade below book value, what is a reasonable amount? 50%? That still would lead to a $12 share price. At a minimum it should trade at $7.81, the per share amount of cash on hand.
The comparables which slightly favor YECO are the lower shares outstanding and lower float. But CREG still has a very small float by most trader's standards. YECO's shares outstanding will be considerably higher after consolidation. The short interest on YECO, at least as of the date of the last short report, is less than 3%. YECO's spike was not really due to a short squeeze, so CREG's low short interest should also not be much of a concern to traders at this time.
We find that comparing CREG's superior fundamentals to YECO is very valuable in determining that CREG is due for a huge pop. There was clear evidence that CREG was a sympathy to YECO on Friday afternoon after YECO spiked. We recommend that readers watch CREG very carefully next week, using YECO, CCCL and NCTY as three recent examples of what can happen to these Chinese-based stocks, and that these spikes tend to happen in groups.
Disclosure: We are long CREG
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The Cryptocurrency Codex from the Cryptocurrency Institute
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The dividend stock report from dividendstocksonline.com
On Friday YECO was hot once again, rising 66% on 15 million of volume. This had a positive impact on CREG which shot up 20%, with most of that being in the last hour of trading. What makes CREG such a good candidate for a spike like YECO? Two reasons. First, CREG has a small float just like YECO. Second, CREG is fundamentally undervalued based on the assets held on the balance sheet. About a year ago CREG spiked from a little over $1.00 to over $9.00 out of nowhere. We think the conditions are right for that to happen again.
Let's review finviz data for CREG:
The key metrics to look at are:
Book value per share of $24.12
Cash per share of $7.81
P/B of 0.07
P/C of 0.20
P/FCF of 5.11
Shares outstanding 8.36 million
Float 5.56 million
Short float 3.95%
CREG has a book value per share of $24.12 and cash per share of $7.81, both substantially higher than its stock price of $1.59. This results in a price to book ratio of just 0.07x and price to cash ratio of 0.20x. Let that sink in for a second, CREG is trading 5 times lower than its cash balance. This stock would need to increase 5x just to come in line with the cash it has on its balance sheet and about 15x just to come in line with its book value.
Finviz doesn't recognize any revenue for CREG, but that is actually not true. It has a sales lease business model in which it records all of its income as interest income. The clue here is the P/FCF metric. While Finviz doesn't record any "revenues", it recognizes that it is generating free cash flow, and that its is trading at just 5 times its FCF.
CREG's share float is 5.56 million on outstanding shares of 8.36 million with a relatively low short interest of just under 4%.
Now let's look at finviz data for YECO:
The key metrics to look at are:
Book value per share of $1.54
Cash per share of $0.37
P/B of 4.66
P/C of 19.26
P/FCF N/A
Shares outstanding 4.56 million
Float 1.09 million
Short float 2.45%
YECO has a book value per share of $1.54. Prior to its big move, it was actually trading at book value. The Millennium Sapphire deal closes for $50 million by issuing 25 million shares at $2.00. So book value per share will remain in the $1.50 to $2.00 range even after consolidation of the businesses. The rest of the value metrics do not compare as YECO has very little cash on its balance sheet and does not generate FCF.
The point of comparing CREG's fundamentals to YECO is to show that YECO was trading at higher ratios even prior to its move. The knock against CREG would be that it is a Chinese company and that they should trade below book value, which is clearly not the case with YECO. And even if CREG deserves to trade below book value, what is a reasonable amount? 50%? That still would lead to a $12 share price. At a minimum it should trade at $7.81, the per share amount of cash on hand.
The comparables which slightly favor YECO are the lower shares outstanding and lower float. But CREG still has a very small float by most trader's standards. YECO's shares outstanding will be considerably higher after consolidation. The short interest on YECO, at least as of the date of the last short report, is less than 3%. YECO's spike was not really due to a short squeeze, so CREG's low short interest should also not be much of a concern to traders at this time.
We find that comparing CREG's superior fundamentals to YECO is very valuable in determining that CREG is due for a huge pop. There was clear evidence that CREG was a sympathy to YECO on Friday afternoon after YECO spiked. We recommend that readers watch CREG very carefully next week, using YECO, CCCL and NCTY as three recent examples of what can happen to these Chinese-based stocks, and that these spikes tend to happen in groups.
Disclosure: We are long CREG
Bitcoin has gone from a concept worth pennies a few years ago to worth thousands of dollars. It may appear to some who are late to the game that the opportunity to get rich is gone. However, there are still plenty of ways to make some money trading in bitcoin and other cryptocurrency. Here are some links to valuable reports and strategies:
The Cryptocurrency Codex from the Cryptocurrency Institute
Secrets To Unlimited Free Bitcoin
The Crypto-Currency Evolution eBook
Bitcoin Complete Guide for Dummies
The Bitcoin Miracle Guide
The Bitcoin Cheat Code Book
The Crpytocurrency Course
Bitcoin Investing Live
If you're interested in making money investing or trading the stock market, here are some good resources to assist you. This includes technical analysis, investing in the weed sector, dividend stock investing, gold and commodities, sector rotation, options trading and microcap trading strategies.
Microcap Millionaires Free Video: Cheap Gold Miner Set to Soar in Fall 2017
The dividend stock report from dividendstocksonline.com
The dividend stock report from Dividend Stocks Rock
Top rated signals for binary options from binaryoptionsprosignals.com
Goldmasterinvesting.com Ocean Of Gold Report for the top 15 gold mining companies
Trader Review shows how to time the market with its "Percent of X" indicator
The Trader's Academy Club
The Wealth Builder's Club from beatthemarketanalyzer.com
MyBB: A Forum For Investors and Traders
Spartan Trader Forex Academy Live Daily Trading Room
Try the Z Code System if you're looking for other ways to make money systematically outside of the stock market.
Top rated signals for binary options from binaryoptionsprosignals.com
Goldmasterinvesting.com Ocean Of Gold Report for the top 15 gold mining companies
Trader Review shows how to time the market with its "Percent of X" indicator
The Trader's Academy Club
The Wealth Builder's Club from beatthemarketanalyzer.com
MyBB: A Forum For Investors and Traders
Spartan Trader Forex Academy Live Daily Trading Room
Try the Z Code System if you're looking for other ways to make money systematically outside of the stock market.
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