Small Cap Stock Pick Of The Week: CPQQ.OB China Power Equipment
Nov 19, 2009 Small Cap Stock Picks
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Small Cap Stock PICK CPQQ.OB
I knew right when i found this stock just by looking at the chart that this stock was going to be a huge winner for the black service crew. CPQQ IPO’d earliar this year and has since formed the picture perfect ascending triangle pattern which broke out @ $2/share where i took up my first position @ 2.25 in anticipation of a continuation and alerted to buy more on any chance you get in case of a dip.
CPQQ.OB reported huge growth on Tuesday with a 253%($7.9m) increase in revenue and staggering numbers on net income which increased 516% ($1.4m) compared to 2008 third quarter numbers. CPQQ develops an amporphous alloy transformer that serves as a GREEN replacement to the standard steel bases transformers. According to CPQQ their alloy transformers consume 77% less electricity while in operation compared to the silicon steal transformers. China has began the process of switching to CPQQ’s type of power source as it not only reduces the amount of energy needed to be used but it cuts down on air pollution as it takes less coal to burn to generate the electricity needed to power the transformers. Rumors have also been scattering that CPQQ is releasing their alloy Transformer version of Optimus Prime in early 2010 which will have a huge advantage over the Decepticons with its light weight and energy efficient alloy.
Comments from the CPQQ.OB
Mr. Yong Xing Song, Chairman of the Board of China Power Equipment, said, “The third quarter 2009 was a dramatic improvement in our financial performance over the third quarter 2008, led by amorphous alloy transformer cores that were up 322 percent in revenues and up 354 percent in gross profit from the third quarter 2008. Amorphous alloy transformers in the third quarter were up 159 percent in revenues and up 169 percent in gross profit from the third quarter 2008. To help fulfill the large increase in our customers’ orders, we contracted out some production to a manufacturer for whom we provide technical support.
“Our revenues from silicon steel cores and transformer declined because we have exited that product line to focus on amorphous alloy products as our major product lines and are no longer actively marketing steel core products.
“In addition to higher revenues, our expenses remained under good control and our interest expense was lower, so our net income increased 516 percent to $1.41 million in the third quarter compared with the third quarter 2008.
“We have funded our recent operations mainly through cash generated from operations. We believe our existing cash and cash equivalents will be sufficient to maintain our operations at the present level for at least the next 12 months.”
The Chinese government has mandated that in the next few years, China’s traditional steel core electric transformers will be gradually replaced by amorphous alloy transformers, because they are far more energy efficient.
For the full earnings overview article CLICK HERE
Technical Analysis:
After breaking out from $2/share we have risen strait to the $3 mark. This could be an area that we battle or we shoot right past this into tomorrow. I think its very possible that momentum continues into tomorrow and price pushes past $3 and possibly this hits $4 within the next month. I have a sizeable position here though and will be looking to take at least some of my profits in the next days weeks.
