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Sunday, December 20, 2009
Lately, Chinese out of home advertising stocks have been on fire. Focus Media holdings (FMCN), and VisionChina Media (VISN) are both at or near 52 week highs with strong trading volume. FMCN, closed at $16.81 on Friday, December 18, which represents a 20 P/E against the average 2010 EPS estimate of $0.83. VISN, closed at $12.05 on Friday, December 18, which represents a 22 P/E against the average 2010 EPS estimate of $0.54.
I think Wall Street is about to discover a third major player in the same sector and find it incredibly undervalued compared to FMCN and VISN. Enter China MediaExpress Holdings (CCME), which operates the largest television advertising network on inter-city express buses in China. CCME's clientele includes local brand names as well as those well-known international and national brands such as Coca Cola, Pepsi, Siemens, Hitachi, China Telecom, China Mobile, China Post, Toyota, Bank of China and China Pacific Life Insurance.
CCME, formerly TMI, was acquired in a SPAC transaction this October. They have $41m of cash with no debt. Revenues grew 65% last quarter and net income grew 43%.
Net Income through September 30, 2009 was $27.4m and the Company appears to be on track to take on management's full year target of $42m. CCME has approximately 24m shares outstanding and approximately 10m warrants with a strike price of $5.50. Estimated fully diluted shares outstanding using the treasury method will be approximately 29m at the end of 2009. EPS for 2009 should be $1.35-$1.45 if they hit the target. (The CEO said, “Historically, our fourth quarter is seasonally our best quarter. It appears that the 2009 fourth quarter will be no exception.”). For 2010, managment is targeting $83.5m in net income and fully diluted shares outstanding should be approximately 35m, for a targeted 2010 net income of $2.39 per share.
To apply the forward 2010 P/E of 20 that competitors FMCN and VISN currently have to $2.39 EPS would give CCME a price per share of $47.80. What makes CCME even more interesting is it currently has a trading float of only approximately 750k shares with 168k of those shares sold short.
If Wall Street likes FMCN and VISN enough to give them a 20 P/E, they should salivate over CCME once they discover the fundamentals of this Company.
Disclosure - I am long CCME since it was TMI under $8. This blog is my personal opinion and not investment advice. Never chase stocks and always do your own due diligence and be responsible for your trades.
Recent SEC Filing with Net Income Targets and Share Counts
Third Quarter Press Release
CCME Float Information
Saturday, December 5, 2009
Everyone should do their own research and not follow any individual as the stock market has risks as well as rewards.
at www.super-trades.com in 2009 :
17 stocks have been blogged (average 1.4 per month)
Average gains so far 108%
Average time for each stock to get to the high is 37 days
Range of gains 45%-364%
Range of days to get to the high is 2 to 166
*** 16 of the 17 stocks are still above the original spot I entered them ( while I am not a long term holder of these stocks, it does speak to the quality of the ideas and the entry point) ***
My 4 latest stocks that I am in and I do not believe they are finished moving are:
TMI - Blogged at $7.50, currently at $10.54 and has hit $13.65 so far 82% gain at high
EDS - Blogged at $7.90 , currently at $9.04 and has hit $13.69 so far 73% gain at high
TMI - Blogged at $7.85, currently at $8.03 and has hit $9.02 so far 17% gain at high
HWG - Blogged at $40, currently at $41 and has hit $49.95 so far 25% gain at high
TMI - Has a very small float and has been shorted from the high in the $13's. They are about to go on a road show to institutions to get much needed exposure. Competitors VISN and FMCN were just upgraded with targets that give them P/E's in the 20+ range. TMI should do approximately $1.40 EPS in 2009 and over $2 in 2010. I believe this stock is on the verge of a powerful second leg higher. Eventual target $15-$25. I am in from the $8's.
EDS - This Company is virtually unknown by Wall Street thus far. They are a popular spotsgear Company in China (Think Nike, Reebok, UnderArmour ground floor). They should do approximately $1.40 EPS in 2009 and competitors have P/E from 17+. This Company just needs exposure. They are not required to report 2009 results until March 2010, however I have to believe they try to get exposure before then. This stock, when discovered should make a powerful second move higher. Eventual target $15-$25. I am in from the $8'S.
IDI - Same problem as EDS. just needs exposure. Another out of home advertising Company in China that should do approximately $1-$1.20 EPS in 2009. Competitors have P/E of 20+. Not required to report until March 2010 also. Just needs exposure to make a powerful first move. Eventual target $11-$15. I am in from the $7's.
HWG - 500k float, 1.5m shares outstanding and on a pace to do $10 EPS in 2009. Was a $140 stock before they had problems in their energy sub that have now been written down to zero. Should be slow going but steady move to much higher levels $60+. Very thin and volatile and meant for small positions that can handle 5 point swings on 5k shares. Eventual target $60-$100. I am in from $40.
General market conditions must be monitored as well as the macro environment in China for the Chinese companies.
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Welcome to super-trades.com, blog home of Superman. Purpose of this blog is for me to discuss my trades and stock ideas (As well as opinions and rants on stock market related issues). I will mention the date and price I enter. As far as exits, I always try to take half off when I have some profit and if I believe in the stock, let the rest run further. I always also use mental stop limits, at which time I would exit and minimize any losses. I do not like to give price targets unless I can support them by P/E in some way or by comparison to another stock. I just post stock trades and ideas that I believe will go higher (or lower for shorts) and the reason I believe that. Individuals should have their own strategies for managing profits and losses. My stock picks tend to NOT be daytrades at all and many take time to move. I am not an investment advisor and this blog should not be considered or followed as investment advice.