Separating Winners From Losers in China
American Dairy looks fairly cheap, but I don't see it being a double or triple in 2010. Therefore, I am sticking with smaller and also very profitable dairy stocks like Yayi International (YYIN) and Rodobo International (RDBO). I have no particular motivation for investing in the China dairy space, other than that these two stocks just look plain mispriced. They have rock-solid fundamentals and trade on dirt-cheap valuations, giving them the potential to be the next doubles or triples.
With Rodobo, I still have a bit more homework to do. With Yayi, I have already met management and attended the groundbreaking ceremony at their new facility near Xi'an, and they have invited me to tour and film their new production facility in Tianjin. I expect to do a more complete write-up on these two stocks in the next week or so.
Lastly, there is Subaye (SBAY). I have finished all of my homework on Subaye, including spending over five hours with the CFO (See that interview here.) and believe it has the potential to be an easy triple. The stock trades at only two times forward earnings before interest, taxes, depreciation and amortization, or EBITDA, consistently generating net income and cash flow and has already applied for a Nasdaq uplisting.
Separately, with the recent boom in U.S.-listed China stocks, it is getting harder and harder to find the next doubles and triples, but I intend to keep looking and will keep readers posted.
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