This Day On The Street
Continue to site
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

China New Energy a Buy, Ignore the Math

If NEWN can start making the rounds and generate research coverage and better institutional penetration, there could be more upside placing it more in line with HPJ at 19 times earnings. This would imply a share price of $23.56.

Given that the company has already begun attending investor conferences, such as the Rodman conference in Beijing, and has already hired an investor relations firm, I think eventual research coverage is likely.

The key catalyst that will cause the stock to pop will be when the company puts out a press release stating that it has appointed its independent directors, which is necessary for the uplisting. Based on my discussions with management and its IR firm, the process of appointing these directors is already under way.

Currently NEWN shares trade for less than $8.00 and seem to show a significant amount of support at prices above $7.00, so the potential upside vs. downside profile of the stock currently looks very attractive. Last year the stock hit a 52-week high of $10.00, but I now view that high as largely irrelevant because it was based on a different share count and it took place prior to the two new acquisitions, which significantly enhance the company's earnings potential.

Recent comments by CEO Fushun Li also provide further comfort, "we have a clean capital structure, our balance sheet is very healthy, and we do not anticipate issuing additional equity in the near future. Finally, we have significant excess production capacity and can achieve our 2010 growth targets without incurring meaningful additional capital expenditures."

At the time of publication, Pearson was long NEWN.OB.

The author can be reached at
Rick Pearson is a Beijing-based private investor focusing on U.S.-listed China small-cap stocks. Until 2005, Pearson was a director at Deutsche Bank, spending nine years in equity capital markets in New York, Hong Kong and London. Previously, he spent time working in venture capital in Beijing. Mr. Pearson graduated magna cum laude with a degree in finance from the University of Southern California and studied Mandarin for six years. He has frequently lived, worked and traveled in China since 1992.
3 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
ABAT $0.04 -6.82%
HPJ $2.01 0.00%
AAPL $95.03 -2.90%
FB $116.73 7.20%
GOOG $691.02 -2.10%


Chart of I:DJI
DOW 17,830.76 -210.79 -1.17%
S&P 500 2,075.81 -19.34 -0.92%
NASDAQ 4,805.2910 -57.85 -1.19%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs