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Editor's note: This is the second article in a series on investing in China. The previous topic was How Not to Invest in China.

Put on your ear muffs. Thirty-five years ago, Warren Buffett mentioned that he felt like an oversexed guy in a brothel. Ear muffs off. Three and a half months ago, I felt like a kid left alone in a

Toys 'R Us

store after dark.

Granted, Buffett's track record over the last 35 years is greater than mine over the past few months, but triple-digit gains are undeniably "above average." In March, I was offering to pay people if they gave me money and I lost it. I guess that's how market-bottoming can affect you.

Now, I'm optimistically cautious. There are still a lot of things that could go wrong. There are multiple problems still floating in the air in Eastern Europe, not to mention the great potential for commercial mortgage-backed securities to crash the boards harder and longer than the subprimes. That said, I still can't control myself when I see opportunities that make me feel like I did when I opened my 12-year old Christmas present, a Tyco 6 wheeling remote-control car that I proceeded to drive up and down the hotel hallways to my parents' dismay and embarrassment.

So here are four companies that bring out the kid in me again.


China Digital Communication Group


is irresistibly cheap, not to mention it just captured a veteran electronics CEO who founded a 3C electronic products manufacturing firm and grew it to hundreds of millions of dollars in revenue. China Digital, however, is trading at less than $10 million. Maybe I'm crazy, or maybe I just love electronics right now after the sector got crushed in price this last Christmas season.

2. The second company to consider may have the most upside in the long run, but is more of a gamble.

China Clean Energy


is in the biodiesel and specialty chemical products business. Rumors are that this company is increasing capacity to bring on $14 million of net income annually. Not bad for a company at $10 million. It's less of a rumor now, as the company just put up new pictures of its expansion plant in construction. A word of warning, another company,


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, operating in the same province as China Clean Energy had to shut down production because of a new consumption tax that took effect on Jan. 1, 2009. So far, China Clean Energy appears to be in the clear and as of today reiterated that the value-added tax has not been finalized and that it is watching the situation closely.

3. From bikes to trains to video games at the biggest toy store there is. Somehow, we ended up in the electronics isle, and it's only suitable that I disclose my fully integrated information and entertainment service provider stock:


. My estimate puts 2009 earnings at $10 million plus or minus $5 million. That said, my estimate could be hugely understated, as growth rates are in the triple digits. Did I mention that subsidiary is working with


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? Enough said.

4. I don't want to grow up because if I did, I couldn't be a Toys 'R Us kid. To stick with the theme of electronics, here's a company that has been laughedat by investors down 40% since its last conference call:

China 3C Group


. It just acquired its logistics company to increase efficiencies. China 3C has been trying to uplist for over a year, getting unfairly punished by investors; For $38 million, you can catch a company that made $26.8 million last year.

Lastly, I did look into Toys 'R Us. It's owned by

Vornado Realty Trust

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, which according to Google has a P/E of over 1,000. It comes with a "yield" of 8.5% and its P/E is actually around 10. I say "yield" because thei dividend is not all cash anymore, but includes shares of Vornado stock as well. I'm not confident in valuing Vornado, and I'll leave it at that.

It has been said that when it comes to markets, markets are never wrong, opinions often are. I disagree. Markets can persist to incorrectly value companies for an incredibly long time. Give them enough time, and they still may be wrong. My opinion is that if you have a company that makes $10 million carrying a price tag of less than $50 million and has the growth potential to grow income to $100 million, there is a lot of money to be made.

At the time of publication, Bradford was long China Digital Communication Group, China Clean Energy, and China 3C Group.

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."