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One of the most important aspects of a stock analysis is evaluating a company's sales trends. Since most companies rely on sales as their primary source of profits, whether sales is growing steadily should have a big impact on how you view the company's prospects.

We ran a screen with this idea in mind, beginning with US-traded stocks of companies based in China. We screened these names for those that appear undervalued to earnings growth, with PEG under 1.

We then screened these names for those with positive trends in sales, with faster growth in revenue than inventory year-over-year. Since inventory represents the portion of goods not yet sold, faster growth in revenue than inventory is considered a good sign.

To screen for healthy liquidity, we also only focused on those companies with inventory declining as a percent of current assets.

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

We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.

Do you think these stocks will continue to see strong sales trends? Use this list as a starting point for your own analysis.

List sorted by difference between growth in revenue and inventory.

1. Spreadtrum Communications Inc. (NASDAQ:SPRD): Operates as a fabless semiconductor company that designs, develops, and markets baseband processor and RF transceiver solutions for wireless communications and mobile television markets. Market cap at $627.45M. Price at $13.66. PEG at 0.31. Revenue grew by 51.89% during the most recent quarter ($192.22M vs. $126.55M y/y). Inventory grew by -29.96% during the same time period ($93.22M vs. $133.1M y/y). Inventory, as a percentage of current assets, decreased from 34.59% to 17.88% during the most recent quarter (comparing 3 months ending 2011-12-31 to 3 months ending 2010-12-31).

2. RDA Microelectronics, Inc. (NASDAQ:RDA): Designs, develops, and markets radio-frequency and mixed-signal semiconductors for cellular, broadcast, and connectivity applications. Market cap at $551.56M. Price at $12.58. PEG at 0.97. Revenue grew by 43.28% during the most recent quarter ($82.36M vs. $57.48M y/y). Inventory grew by 1.69% during the same time period ($36.09M vs. $35.49M y/y). Inventory, as a percentage of current assets, decreased from 21.4% to 15.77% during the most recent quarter (comparing 3 months ending 2011-12-31 to 3 months ending 2010-12-31).

3. Xinyuan Real Estate Co., Ltd. (NYSE:XIN): Engages in residential real estate development in China. Market cap at $272.99M. Price at $3.52. PEG at 0.53. Revenue grew by 45.62% during the most recent quarter ($199.77M vs. $137.19M y/y). Inventory grew by 7.95% during the same time period ($768.65M vs. $712.05M y/y). Inventory, as a percentage of current assets, decreased from 66.23% to 56.24% during the most recent quarter (comparing 3 months ending 2011-12-31 to 3 months ending 2010-12-31).

4. Yongye International, Inc. (NASDAQ:YONG): Engages in the research, development, manufacture, and sale of fulvic acid based liquid and powder nutrient compounds for plants and animals, which are used in the agriculture industry in the People's Republic of China. Market cap at $165.77M. Price at $3.29. PEG at 0.21. Revenue grew by 60.27% during the most recent quarter ($44.86M vs. $27.99M y/y). Inventory grew by 30.72% during the same time period ($86.12M vs. $65.88M y/y). Inventory, as a percentage of current assets, decreased from 44.97% to 26.% during the most recent quarter (comparing 3 months ending 2011-12-31 to 3 months ending 2010-12-31).

*Accounting data sourced from Google Finance, all other data sourced from Finviz.

Source: 4 Undervalued Chinese Small Caps With Strong Inventory Trends