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InternationalInvesting
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Scouring the globe for the investments with compelling risk/reward scenarios. Depending on market conditions these include dividend stocks, REIT's, MLP's, International Small Caps, special situation's, metals, bonds, etc. I focus on long term fundamentals while capitalizing on short term... More
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  • LPH Quick Profits
    LPH is an oil, gas, and tar distributor in china. They directly benefit from the Chinese auto market and China's economic growth. They are forecasting 47%+ revenue growth for 2011, yet are severely discounted. They trade at 16x 2010 earnings, but this is a vast misrepresentation of their operations and their value. Their GAAP earnings(therefore their PE) currently appear weak because of warrant expenses, which will eventually expire. Taking out these expenses their 2010 guidance implies .31 diluted a 7x multiple. Put next years guidance into the equation with GAAP diluted earnings (Including warrant expense) of .51 and now its a 4.2x multiple. The 10K is also coming out soon, hopefully today, which will confirm the companies great results. More importantly it will start to lower the PE ratio on google, yahoo, etrade, etc so more retail investors will buy in. 

    Disclosure: Long LPH
    Tags: LPIH, China, Oil, Gas, Tar
    Sep 28 3:07 PM | Link | Comment!
  • L&L Energy
    L&L Energy is a U.S. company that operates in the coal industry in China. Their 2011 guidance is for 1.61 EPS. However this should easily be surpassed, the 1.61 figure is derived just from existing capacity expansions. With the macro environment perfect for coal consolidators like LLEN they should easily beat EPS guidance. The chinese government is promoting consolidation in the industry in an attempt to bring improved safety/health standards to the country. This mainly affects small miners who must be acquired by larger operators. L&L has taken full advantage of this by acquiring these small operators at substantial discounts. Looking out to the near future the company plans on acquiring larger targets that'll be more EPS accretive, and luckily for shareholders they plan to finance with debt. So with no/minimal share dilution any acquisition should enable L&L to beat 1.61. As of time of writing L&L is at 7.29 a six month low, and priced at 4.5x conservative 2011 earnings for a company with 395% growth YOY. Although that rate of growth is unsustainable, L&L will remain a high growth company. L&L could fall more in the short term, due to risk aversion trends in Chinese smallcaps (Even though L&L is American they correlate with Chinese smallcaps instead of the russell), monetary tightening news out of China, breakdown of Support levels, delay in switching auditors, etc. A simple 10x multiple next year, when most of these issues will be resolved would place L&L north of $16 an 120% upside. Another issue weighing heavily on the stock has been the Shunda acquistion. The Shunda acquisition would have doubled L&L 's mining capacity and nearly tripled their coal washing capacity. Alot of traders and investors were waiting for confirmation of the Shunda acquisition, which never came. LLEN eventually decided not to acquire the facility due to potential safety issues, while this instantly hurt the stock near term. It did however show managements dedication both to the company long term and to avoiding accidents which is a necisity if L&L wants to be a sucessful American Company operating in China. Also management owns 25%+ of stock, so their money is right alongside yours.

    On a side note PUDA is quantitatively cheaper, but with LLEN you have executives who have and will successfully execute M&A, so I believe LLEN's risk/reward is more attractive.

    Disclosure: Long LLEN
    Tags: LLEN, China, Coal
    Sep 15 4:50 PM | Link | Comment!
  • Brazilian vs American Utilities
    Dominion (D) is an American Utility company located in Virginia, investors are attracted to the stock for its 4.20% yield. D trades at 13.57x 2011 earnings. Even though D has held up well downturns, yet also performed nicely in bull environments. I would urge D holders to consider reallocating capital overseas into an alternative. CPFL Energia (CPL) a Brazilian Utility seems much more attractively priced. CPL has a dividend yield 220 basis points higher at 6.40% and also has much better capital appreciation potential. This is because unlike in the U.S. where electricity demand is relatively stagnant, in Brazil with around 7% GDP growth for 2010 electricity demand is increasing. So CPL has better potential capital appreciation, 220 basis point better yield, and is 8% cheaper with 12.45x 2011 earnings.


    Disclosure: Long CPL
    Sep 07 7:54 PM | Link | Comment!
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