2008 Stock of Day

Gafisa SA (GFA)

March 3, 2008 by Chris Leave a Comment

Gafisa closed 8.35% off-of its all-time high Friday as the Dow Jones dropped 316 points (2.51%), the NASDAQ fell 60 points (2.58%) and the S&P joined the party by shedding 37 points (2.71%). Quarterly earnings are expected to be released Tuesday, March 4, 2008.

Fewer new positions were established than sold but $142.9 million more shares were purchased than sold during the last reporting period. However, things don’t look as rosy when searching through the financials as cash from operations and investments are sinking while cash from financing is increasing. Net income took a step back, earnings estimates look poised to drop but total revenue is increasing.

I first started noticing GFA on my daily screens on December 3, 2008 at $37 and then profiled it again a week later on December 10, 2008.

GFA – 40.50, a spread triple top breakout on the P&F chart; the stock made a new high on the daily and weekly charts on above average volume (volume was 258% larger than the average on Friday). Screened last week at $37.00.

I read that Cramer has been pumping the stock so don’t buy the recent surge (sell to his sheep; short term), especially since the overall market is hurting. GFA is one stock that I will be looking to grab shares in if the market can show any strength in the future. Brazil has been going through a period of growth that is allowing the middle and lower class citizens to purchase homes which could lead to continued success for the company. In addition, billionaire entrepreneur Sam Zell owns 14% of the stock through his private equity firm.

Institutional Numbers:
Total Held by Institutions: 99
Money Market: 57
Mutual Fund: 40
Other: 2

New Positions: 23
Positions Sold: 30
Shares Held: 25.8M, +3.6M
Shares Held Previous Period: 22.2M

Shares Bought: 5.9M
Shares Sold: 2.3M
Value of Shares Bought: $233.6M
Value of Shares Sold: $90.7M

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Filed Under: 2008 Stock of Day, Stocks

Gushan (GU) Making a Move

February 5, 2008 by Chris 10 Comments

I wrote about “The Next Chinese IPO – GU” on Wednesday, December 19, 2007 and consider it the first unofficial “stock of the day” of 2008. The stock was up 18.27% on volume 252% larger than the average; the largest volume spike since the stock’s IPO debut.

Fools like Cramer and CNBC said the stock was under the radar until today but readers here have known it was out there and has potential in the upcoming year. It touches upon a few hot topics and stock drivers from the past couple of years: energy, china and IPO’s. Three categories that are not unfamiliar on this blog (especially in 2007). It does scare me that Cramer (profit jinx) mentioned Gushan today but I will ignore the superstitions and continue to follow the stock while grabbing shares.

A second firm from Wall Street decided to initiate coverage on the stock with a buy recommendation. I labeled the stock a buy the day it debuted and maintain that analysis based on my fundamental and technical research:

“The Next Chinese IPO:
Now it’s time to jump on the next IPO that’s about to debut on New York Stock Exchange under the symbol “GU”. Chinese biodiesel fuel producer Gushan Environmental Energy Ltd. (GU) said it plans to raise about $171.6 million in an initial public offering of American Depositary Shares (ADS).”

Earnings Estimates:
FY 2007: $1.02E
FY 2008: $1.52E +49%
FY 2009: $2.00E +31%

Revenue (in millions):
2002: 5,258
2003: 10,422
2004: 23,793
2005: 49,840
2006: 113,891

Net Income:
2002: 2,080
2003: 5,361
2004: 10,245
2005: 21,069
2006: 45,972

PEG Ratio: 0.77x
P/E Ratio: 38.49

Why the surge today? The stock seemed to be following a surge in the Shanghai market.
Another stock of related interest higher today: YGE, up 13.38% on volume 60% larger than average66666666666666666666666
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Filed Under: 2008 Stock of Day, China, IPO

Yingli Green Energy Holding Co. (YGE)

January 8, 2008 by Chris 10 Comments

Stock of the Day
Yingli Green Energy Holding Co. Ltd. (YGE)
Monday’s Closing Price: YGE – $32.24

Sector: Technology
Industry: Semiconductor (Solar)
52-week Price: $10.48 – $41.50

As I said last night, the stock took a hit to end last week on heavy volume which concerns me but corrections are healthy. A pullback to the mid $20’s could be possible based on the prior pullback in October and November. I am looking to add shares based on institutional numbers alone (which are listed below). Approximately 10 million more shares were bought than sold for an estimated “plus” $400 million during the last reporting period.

We had 47 new positions established while 3 positions were sold out (about 15.6-to-1 ratio of buyers to sellers). The float is 25% of the outstanding shares and the market capitalization is more than $4 billion which puts this stock in the bull’s-eye of major institutional investors.

Volume is averaging about 5 million shares traded per day and increasing as each month passes. The ideal entry is somewhere in the mid-$20’s range or slightly above the prior pullback area of $22.50.

This stock has triple digit potential and could be a leader come year’s end. If the opportunity presents itself: trade it and follow the rules! If it fails, sell! It’s that simple.

Sister Stocks (Top Rated Industry by IBD):
FSLR – $236.84
STP – $74.96
SOLF – $31.78
JASO – $68.05

Potential Trade Set-up:

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Filed Under: 2008 Stock of Day, IPO, Stocks

China Sunergy Co. (CSUN)

January 4, 2008 by Chris 12 Comments

Stock of the Day
China Sunergy Co. Ltd. (CSUN)
Friday’s Opening Price: CSUN – $16.15

Sector: Technology
Industry: Semiconductor (Solar)
52-week Price: $4.83 – $19.23

2007 “Stock of the Day” stocks gained an average of 43% (32 total stocks).

China Sunergy (CSUN) is part of a booming solar industry that includes stocks such as the ones listed below; all head lined by FSLR, a stock that is up more than 700% over the past year or so. This industry is said to grow from about $15 billion to more than $69 billion over the next 5-10 years. Growth like that will flow down to the group leaders such as the ones below. FSLR, STP and YGE are currently the leaders. I am actually looking to get my hands on a few shares of Yingli Green Energy Holding (YGE) and will present a case study analysis (stock of the day) next week. The next pullback will be the ideal entry and that looks to be coming over the next several weeks (an entry between $30 and $35 is looking fine). Enough of YGE!

China Sunergy Co., Ltd. and its subsidiaries engage in the design, development, manufacture, and marketing of solar cells in China. The company manufactures solar cells from silicon wafers utilizing crystalline silicon solar cell technology to convert sunlight directly into electricity through a process, known as the photovoltaic effect.

The is my first Chinese stock coverage of the new year, extending a trend that was very successful in 2007 with stocks like BIDU, JASO, EDU, MR, PTR and FSLR. I don’t know if CSUN will follow through but the company looks interesting. However, the more I do this analysis tonight (Thursday night), the more I like YGE.

Recent revenue, net income and future earnings all catch my attention and can play major roles in the driving force of the stock’s future price.

Sister Stocks (Top Rated Industry by IBD):
FSLR – $265.87
STP – $88.22
SOLF – $36.95
YGE – $38.02 (another stock I am looking to add)

Potential Trade Set-up:

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Filed Under: 2008 Stock of Day, China, Stocks