9. China Gerui Advanced Materials ( CHOP) is a steel producer in China, using advanced technology to make higher value-added products.

It is operating at full capacity, but plans to expand and double output in 2011, a strategy being hampered by recent floods in Northern China. Morningstar isn't accounting for such expansion in its 25% 2011 growth estimate, indicating material upside to fair value. Gerui's inventory system is unique. It purchases steel based on customer orders, minimizing costs.

Morningstar's $10 fair-value estimate is consistent with 9.2 times 2011 earnings, a conservative valuation, especially considering China's materials appetite and Gerui's expansion plan. Morningstar's estimate implies that China Gerui's stock has 68% of upside or greater.

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