Both these stocks ive traded in the past for great profits and have sold off on the momentum. Earnings are coming up for both of them this week, Monday for CHCG.OB, and Tuesday for CHNG.OB.
CHNG made a huge run where i traded it for over 50% gain and has succumb to the inevitable profit taking tumble only to find support near its ascending trendline after falling 23% in one session on news of a private placement. The stock has rebounded and seems fairly stabilized at the moment
Here is my initial analysis of CHNG from when i first analyzed it before it made its big run:
Fundamental Analysis:
CHNG.OB is a small cap company with a current market cap of $99.5m, compared to the Oil & Gas industry’s 2.5b average cap. While its current PS ratio is trading at a higher multiple than the industry’s, the important thing to note is CHNG’s PE ratios, with trading at 13.7x multiple compared to the industry’s 17.3x PE. Even more impressive is their forecasted growth into the future with a one year forward PE of just 3.67x. For the current year, CHNG is expecting to report .39eps and a huge jump to follow in 08? with expectations of 1.12eps, and 1.39eps in 09?. Hypothetically speaking, if CHND continued on average its trading multiple of 13.7x we could expect price per share to be trading in the mid teens in 2008, if the company doesn’t run into any trouble. The financial condition also looks great here, with a high current ratio and no long term debt, making this an attractive growth stock.
I’d be more than happy to re-enter a position here if CHNG can step up to the plate and deliver us some positive results in their earnings call tuesday.
CHCG.OB is another very speculative chinese stock that looks like its on its way to becoming Chinas next electronic retail giant comparable to our Best Buy and Circuit City here in the USA. CHCG is expecting some huge growth going forward with plans to expand to 4000 stores by 2010 worth an estimated $1 billion in annual sales. Technically price has been trading in its bullish ascending channel for quite sometime and had a very bullish breakout which i believed to be a catalyst for a continued move higher though price was hammered down by dilution leading to a tumble back to the ascending support line. Price action has been pretty stagnant until friday when CHCG.OB announced that they would be announcing earnings on Monday which lead to a bullish rally making this stock look ready for a turn around. If CHCG.OB can deliver positive results monday i think it will be a turning point for this bullish stock and the negative sentiment from the dilution will be forgotten.
Heres some Fundamental Analysis from the message boards:
“CHCG is getting more and more out of the small cap category as its growing here ket. I mean this is a company that sells a lot of stuff, they’re expecting $369m in sales for this year alone, and if i recall correctly they were forecasting a billion in sales by 2010. So looking at its current sales and growth in sales $387m doesn’t look very expensive in my eyes, it doesn’t look dirt cheap, but not excessively expensive. Their P/S ratio currently is trading at 1.56x compared to the industry average of .8x. This is based on the last 4 quarters of sales of $247m and current market cap of $379
P/S = Market cap/Sales = 379m/247m = 1.56x sales
Though the more significant ratio we want to look at is the Price to earnings ratio which CHCG is trading below the industry average with a current PE of 19.34 compared to the industries 25x earnings. So CHCG looks inexpensive from this point of view especially given their steady earnings growth with a forward PE of just 11.34. So basically how we look at that forward PE is this, if price to were remain unchanged from todays price, in 1 year from now the PE ratio would be 11.34x. Which would make CHCG.OB a very attractive undervalued stock given that the industry average is 25x. But thats not likely to happen. So we would expect CHCG to rise along with its rise in earnings possibly to maintain its current conservative earnings multiple of 19x. If that were the case over the course of the next year if CHCG were to report its expected .56 eps then hypothetically CHCG should trade near 10.83. If CHCG’s momentum gained quicker which is highly possible in the result of a chart pattern breakout and began to trade at an earnings multiple comparable to the industries 25x then hypothetically price would trade around:
Eps = .56
PE = 25x
.56 x 25 = $14/share. ”
Will keep those one on close watch monday for positive results and possible re-entry.
