NEW YORK (
) -- Ready to go! I don't see why I shouldn't point out companies that are "fired up, ready to go," as President Obama would put it. I've got three Chinese companies that are heating up NBA Jam style. There are three parts to this madness.
The first is that I need to believe that the risk of losing money is negligible in the long run. That is to say that these companies are so cheap right now it doesn't make sense not to own them as far as I can tell. The second is I want uplisting potential. Lastly, I want to be able to light the product produced on fire. Fire it up!
is a company I've covered several times as one that I felt would uplist. The company is doing it Tuesday. It's currently a supplier of metallurgical coking coal in the People's Republic of China. Since I've covered this company the ticker has changed from PUDC to PUDZ and is now changing to PUDA.
Why do I think this company is "fired up"? It's talked about consolidating six mines in Yuncheng City, it's priced to shrink, and it is uplisting this week. Don't forget that there is a coal mine consolidation party in that neck of the woods. It's my belief that you'll be lucky if you see these prices ever again as Puda is currently floating above $5 making them a candidate for mutual funds who likely can't wait to get their grubby little fingers all over this value play.
has a trailing price-to-earnings ratio of 3.2 and is also engaged in coal production in China. With 25% of its market capitalization in cash, some would argue it's cheap. Also combine that with Songzai's reported double in sales and net income year over year during the last quarter.
Songzai currently trades at prices that are uplistable and mutual fund friendly. I think that's where the company is headed even though it's made no public statement. I would categorize this as a "no-brainer" because I think that it doesn't take much of a brainiac to figure out that this stock is being given away.
gives off the distinguished aroma that I call uplist. Yes, it too is in the business of coal mining in China. Note that this is 100% personal speculation, but my instinct tells me that I'm hot on the trail. My instinct tells me that uplisting is coming in the very near future. Who knows? What I do know is that L&L appears to be an acquisition machine in the perfect market to acquire. It's priced to stagnate and grew revenue 70% last year. The company is cents away from being mutual fund friendly.
The trick to buying undervalued companies, in my opinion, is buying them before everyone else realizes what's going on. It's kind of like bargain shopping for sports cars -- something you probably don't do every day. Odds are that you don't see a brand new Lamborghini or Ferrari for sale. But say that you do. Say that it's priced at $10,000. Are going to wait for the next person to walk by or are you going to fire it up?
-- Written by Glen Bradford in West Lafayette, Ind.
At the time of publication, Glen Bradford was long Puda, Songzai and L&L.
Bradford is the CEO of ARM Holdings LLC, a hedge fund advisory company. He's pursuing an MBA at Purdue University and is trading his entire tuition in the stock market as well as the tuition of his roomate. His goal is to buy the most undervalued companies that are making money and set to make more money that he can find. In March 2009, he was quoted for saying, "Uncertainty will certainly work for me."