China Direct (CDS) is Ready for Action! ( small cap stock picks )
Friday, December 7th, 2007Avid readers of my work here probably quite familiar with this stock as we have already traded it for a 150%+ gain and recently just traded for around a 25% 1 day trade on the Earnings Call. After some consolidation and a great looking breakout from the symmetrical triangle pattern on increased volume it looks like CDS is ready to possibly make another significant run in favor of the bulls from a technical standpoint and has the #’s to back it up.
Recently CDS just raised their forward guidance which gave us that nice boost on our earnings trade and analysts are expecting now .97 eps for the year of 2008. Given the Management services current 22x earnings multiple this gives CDS a strong forward valuation of .97 multiplied by the 22x earnings ratio which in turn values CDS fairly within its industry around $21.34/share. Todays closing price was 10.73 which gives us a lot of upside potential here for gains near 100%.
I alerted earlier this week on CDS on the shoutbox to watch for the breakout of the symmetrical triangle for a buying opportunity. I took this opportunity today and purchased at 10.15 for a soon to be profitable trade, right? Right!
