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GFRE - Ride The Institutional Wave


 GFRE (Gulf Resources Inc.) manufactures chemical products for use in energy, waste processing, and inorganics.

Firm is recovering with strength following a high-volume selloff on 12/07/10... shows support. There has been a marked level of new and continuing accumulation by institutions (Fidelity, Vanguard, DE Shaw, etc) as of September 2010. In addition the firm is on solid financial footing with superb liquidity ratios (quick > 5.0) and is trading at less than 4.5x TTM EBITDA (as of 12/08.... 380mm market cap against $88.7mm in TTM EBITDA). With the continuing institutional support we're seeing, combined with the growth in earnings and revenues, and the fact that the firm is positioned in industries which profit from inflation and/or a stronger economy, I expect GFRE is a strong trade or investment. My exit loss would be sub-$10 on a close.

Disclosure: I or people I know are long the equity.

Disclosure: I am long GFRE.