Charlie Anderson's  Instablog

Charlie Anderson
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I am currently a student. I use a mix of technical and fundamental analysis to arrive at investing prospects and then do in-depth analysis.
  • Stock Picks 0 comments
    Mar 14, 2010 9:58 PM | about stocks: CEAI, TRLG

     I have decided to switch back to my old method of trading. This involved extensive stock screens every so often to find companies with stellar growth and value figures. Now I've add technical aspects to that. I believe that combining these three elements will yield me with amazing companies and great prices with which I can make great money, and, unlike day trading, I won't come home feeling like a "stock-jobber." [In case you're wondering, that's what market speculators were called in the 19th century.]

    I came up with three fantastic small caps in my screening today. They are Chinese Education Alliance [CEU], China Sun Group Hightech [CSGH], and True Religion Apparel Incorporated [TRLG]. CEU is set to explode, and has [with 100% avg. revenue growth over the last three years] because of the rising education standards in China. Now I'm no expert, but I know that countries that rise out of poverty are very closely associated with countries that have rising education rates. They just go together. That's how a society evolves. CSGH make lithium batteries in China. Lithium batteries are the best batteries out there and this companies has been making them well [with 411% avg. revenue growth over the last three years]. Finally, True Religion Apparel is an up-and-coming clothing maker around the world that makes cool clothes for cool kids, and also doing its job well with 30.3% avg. revenue growth over the last three years.

    Also, all of these companies have very minimal debt loads and low P/E ratios [9.6, 9.2, 13.4, respectively]. They are all beating their industries averages for debt, P/E, 3 year avg. Revenue Growth %, EPS Growth, Operating Margin %, Net Margin %, and Return on Equity. They all have ROEs above 20 for the last 12 months.

    An important thing to note on these companies is the technicals. CEU looks poised for breakout, and with its attractive valuations it looks like a good time to buy. CSGH is a penny stock, and very volatile, while trading on relatively low volume. The share price is 1.46 and it trades around 265,000 shares per day. Do the math, and that's only about $385,000 worth of stock moving on any given day. It also looks poised for a breakout. Finally, TRLG looks like it is peaking. It has strong resistance around 30, and a little above 29. There are also a lot of other technicals pointing to its price collapsing back down to 20. I plan at this point to short it ASAP, and buy to cover when it starts to move up again. I would suggest for longer-term investors to wait until the price goes back into the 20 range and then consider buying.

    These are all great companies with fantastic prospects, but they are also quite risky and small. I can absorb this risk due to my age, but I wouldn't put much retirement money in any of these without a very conservative stop.

    Happy Investing!

    -Charlie



    Disclosure: No positions yet, but hope to open positions soon!

    Stocks: CEAI, TRLG
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