This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Orient Paper: Good Value Play

Stocks in this article: ORPN

But wait, it gets better. The company also released its outlook saying that it expects to not only continue at these levels but "to continue strong revenue and net income growth trend for the fourth quarter 2009 and into fiscal 2010." In other words, despite the recent price spike, buying Orient Paper in the $10 range means investors will likely be paying only three to five times next year's earnings.

It gets even better. My main reason for investing in ORPN was that I see it as an uplisting play, and this is still very much in the cards. Although the company has not yet announced any uplisting, it has given all the clues. ORPN now has a majority independent board (as required by the Amex and Nasdaq), they upgraded their auditor to BDO Limited (also a sign of an uplisting) and they recently conducted a reverse split and are well above the price thresholds for both Nasdaq and Amex. The key question is valuation. The question is: With triple-digit growth in a high-margin business, what P/E will investors place on this stock once it trades on a senior exchange.

The following table is my usual back-of-the-envelope analysis on ORPN's forward P/E. Assuming a very midcase scenario of 50% growth in earnings, a stock price of $20 still leaves ORPN on a P/E of only 8.7 time. This is a stock I plan to hang onto for some time.

Orient Paper's Forward P/E
Earnings growth: 25% 50% 100%
12 month earnings: $24.0m $28.8m $38.4m
Market cap PE ratio PE ratio PE ratio
$10.00 $125.00 5.2 4.3 3.3
$15.00 $187.50 7.8 6.5 4.9
$20.00 $250.00 10.4 8.7 6.5
$25.00 $312.50 13 10.9 8.1
$30.00 $375.00 15.6 13 9.8

Another stock I follow, which reported blowout numbers, was Hong Kong Highpower Technology (HPJ). The company reported quarterly growth in EPS of over 150% with gross margins of 25%. Gross profit was up 49% year-on-year and 70% sequentially. Chairman and CEO George Pan noted: "As we head into the fourth quarter, we believe 2009 will be a much stronger year for us in terms of profitability and overall financial performance. Our net income through the first nine months is already double of where it stood for the comparable time frame in 2008. This strong financial performance is mainly the result of the fading effects of global economic recession on Hong Kong Highpower Technology's business and better raw material cost management."

2 of 4

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,030.21 +6.04 0.03%
S&P 500 2,081.88 -0.29 -0.01%
NASDAQ 4,773.4720 +8.0480 0.17%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs