China 'Uplisted' Stocks to Watch

BEIJING (TheStreet) -- This week we will see two more U.S.-listed China "uplistings," both of which have enjoyed a substantial run-up in price.

China Agritech (CAGC Quote) will begin trading on the Nasdaq on Monday and Puda Coal(PUDZ Quote)which will begin trading on the Amex on Tuesday. China Aritech, which also trades under the ticker (CTEC.0B Quote), was up as much as 10% on Friday and PUDZ closed up 22% on Friday.

Other China stocks that have uplisted this year have also been top performers. As detailed below, the top three stocks on my uplist watch list are: China Biologic Products(CBPO.OB Quote), China Digital Communications(CMTP.OB Quote) and L&L International Holdings(LLFH.OB Quote).

To get a better feel for the upside potential of uplistings, I teamed up with Maj Soueidan, president of GeoInvesting, LLC. Geoinvesting.com has one of the most comprehensive databases that specifically follow U.S.-listed China small-caps. As a result, it is one of my favorites. Some of the findings from Geo:

• RINO International(RINO Quote) uplisted to the Nasdaq in July and initially saw its price jump 10% from $9.10 to over $10.00. Since uplisting, the stock has traded as high as $17.75 -- almost double its pre-Nasdaq price.
• Deer Consumer Products(DEER Quote) was trading at $8 in July when its Nasdaq approval was announced. The stock traded up over 50% in one week, to more than $12 and currently trades at $12.74. It reached a high of $14 in August.
• China Bio Energy(CBEH Quote) was trading at $5 in July and then rose 10% on the day of its Nasdaq approval. It now trades at $6.42, almost 30% above its pre-Nasdaq levels.

Tracking potential uplisting candidates is well worth the effort because uplistings typically result in a significant inflow of new investor demand to a previously underfollowed stock. There are many institutional investors who may be very interested in a specific sector or company but who will simply not invest in an OTC stock.

As soon as the stock becomes Nasdaq or Amex listed, those funds will jump in immediately, giving the stock a boost. Due to the lack of institutional following, many research analysts are reluctant to initiate coverage on OTC stocks, which in itself contributes to a lack of investment by institution funds.