I have posted an article on how there is a high potential in China Market and followed it with a caution by posting another article on bubble forming in China Economy. Today, I would like to discuss about two Chinese companies with no outstanding debt on Long & Short Investment.
The first Chinese company has no debt. It is China Integrated Energy (CBEH), an energy company in Oil market and sells gasoline and diesel. It has performed relatively well in 2009 as it had 100% return on investment. Its current P/E 14.6 and they are growing at a fast pace.
Looking at a one year chart, CBEH has been moving higher ever since the broke out in June 2009. However, the volume did not really support the break out until November 2009. There is also a nine month upward support line. With higher volume, I don’t see it breaking this major support line any time soon. But, I do think CBEH will retrace back to this support level. When it does retrace back, that will be your signal to go LONG. It looks like $7 range is a good entry point.
A second Chinese company is American Lorain Corporation (ALN). ALN is a bulk and canned food processing company that manufactures and sells in China, Japan and Korea. There is a small debt but nothing to be alarmed about. This company's current P/E is 5.8 and it grew at a 60% rate last year and will continue to do so in 2010.
Look at a one year chart, ALN has been moving higher since March 2009. Similar to CBEH, the volume was not really present at that time until October 2009. There is a 11 month upward support line with ALN. Now that the volume has significantly increased, I don’t see this major support line being broken for now. But, I am expecting ALN to retrace back to its support line before moving higher. It looks like $2.85 - $2.95 range is a good entry point to go LONG.
Having minimal debt is good for the company and investors. By combining debt characteristic with technical analysis, growth rate, and P/E, it makes it somewhat easy to pick out a successful stock.
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