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Interested in investing with Chinese stocks? For ideas on how to start your search, we ran a screen you may find interesting.

Emerging markets, particularly the BRIC nations, are pretty popular among investors. But investors beware, an April 15th report from the Chinese government reveals that the country's first quarter economic growth slowed to 7.7 percent, less than the 8 percent median forecast.

While China's recent economic growth is slower than expected, we wanted to focus on regional stocks that may still outperform.

Building the List

To create the following list, we screened for BRIC stocks with short covering that comprises at least 1.5% of share float month-over-month. The decrease indicates that investors are noticeably less bearish on these stocks than they were a month ago. This is especially significant following the government's report.

Five stocks made our final list, all of them hailing from China and Hong Kong. Do you think these firms are poised to move higher? Use this list as a starting point for your own analysis.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.

1. E-Commerce China Dangdang Inc. (NYSE:DANG): Operates as a business-to-consumer e-commerce company in the People's Republic of China.

  • Market cap at $312.7M, most recent closing price at $3.80. Country: China.
  • Shares shorted have decreased from 3.80M to 2.49M over the last month, a decrease which represents about 2.38% of the company's float of 55.03M shares.
  • Investors should note DANG has a lower than average projected earnings growth rate over the next 5 years (6.0%). This is significantly below the analyst projections for e-commerce competitor Amazon.com Inc. (projected EPS growth over next 5 years at 37.69%).

2. Daqo New Energy Corp. (NYSE:DQ): Together with its subsidiaries, manufactures and sells polysilicon in China.

  • Market cap at $142.55M, most recent closing price at $4.20. Country: China.
  • Shares shorted have decreased from 138.30K to 106.78K over the last month, a decrease which represents about 2.67% of the company's float of 1.18M shares. Days to cover ratio at 2.98 days.
  • Despite optimism from short sellers the stock's average daily alpha vs. the S&P 500 index stands at -2.76% (measured close to close, over the last month). During this period, the longest losing streak lasted 5 days (i.e. the stock's daily returns underperformed the S&P 500 for 5 consecutive days). The longest winning streak lasted 2 days (i.e. a win streak / losing streak ratio of 0.4).

3. Focus Media Holding Ltd. (NASDAQ:FMCN): Operates out-of-home advertising network using audiovisual digital displays in China.

  • Market cap at $3.55B, most recent closing price at $26.86. Location: Hong Kong.
  • Shares shorted have decreased from 10.11M to 8.63M over the last month, a decrease which represents about 1.77% of the company's float of 83.76M shares. Days to cover ratio at 5.62 days.

4. Sohu.com Inc. (NASDAQ:SOHU): Engages in the brand advertising, online gaming, sponsored search, and wireless businesses in China.

  • Market cap at $1.87B, most recent closing price at $48.92. Country: China.
  • Shares shorted have decreased from 3.14M to 2.21M over the last month, a decrease which represents about 3.12% of the company's float of 29.79M shares. Days to cover ratio at 3.93 days.
  • Based on conventional valuation ratios, SOHU looks cheap relative to other internet giants. The stock's PEG ratio stands at 1.53, while its Price/Cash ratio stands at 1.94. Even on a Price to Free Cash Flow basis the stock looks cheap, with a ratio of 7.55, compared to Google Inc. (P/FCF ratio at 21.22) and Facebook (P/FCF ratio at 164.98).

5. Suntech Power Holdings Co. Ltd. (NYSE:STP): Engages in the design, development, manufacture and marketing of photovoltaic (PV) products.

  • Market cap at $115.94M, most recent closing price at $0.64. Country: China.
  • Shares shorted have decreased from 26.03M to 14.24M over the last month, a decrease which represents about 9.09% of the company's float of 129.68M shares. Days to cover ratio at 2.38 days.
  • Like other big names in the solar industry STP has had issues clearing its inventory: Revenue grew by -53.31% during the most recent quarter ($409.5M vs. $877M y/y). Inventory grew by -7.6% during the same time period ($508.4M vs. $550.19M y/y). Inventory, as a percentage of current assets, increased from 21.42% to 25.63% during the most recent quarter (comparing 3 months ending 2012-03-31 to 3 months ending 2011-03-31).

* Short data sourced from Yahoo! Finance, accounting data sourced from Google Finance, all other data sourced from Finviz.

Source: 5 Chinese Stocks With Significant Short Covering