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Two Chinese Penny Stocks to Watch

Many people say playing the stock market is like taking a trip to Vegas. The all-you-can-eat buffets and real time jackpot ticker tapes plastered around every corner of the casino lures you in before you realize that your wallet has been flattened.

The allure of quick profits takes investors to the depths of Silicon Valley, the unknown alleys of foreign cities and the hopes and dreams of misguided "management" teams.

But to the lucky few who can count cards and have a keen understanding of betting odds, Vegas can become a calculated gambling experience with exceptional results. Just as in gambling, investing in penny stocks is generally a fruitless endeavor and should not be part of a regular investing routine unless one possesses a special skill set.

Like a calculated gambler, a specific formula can increase your chances for success. Here it is: Company affects change to take advantage of new opportunities + it attains profitability + its shares sell below book value per share = potential investment opportunity.

Two stocks selling under book that might fit this bill are China Marketing Media (CMKM) and Obn Holdings (OBNI).

China Marketing Media

Historically, China Marketing's core revenue stream came from marketing its magazines and associated print advertising in China. Realizing that the future of advertising is not in print, the story just didn't seem to be one that could deliver growth within my parameter of 30% EPS growth.

However, in mid-2008 the company began a new venture that directly benefits from the Chinese consumer's increased appetite for electronic products and an associated boom in the use of credit cards.
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