Gushan (GU) Making a Move

I wrote about “The Next Chinese IPO – GU” on Wednesday, December 19, 2007 and consider it the first unofficial “stock of the day” of 2008. The stock was up 18.27% on volume 252% larger than the average; the largest volume spike since the stock’s IPO debut.

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Fools like Cramer and CNBC said the stock was under the radar until today but readers here have known it was out there and has potential in the upcoming year. It touches upon a few hot topics and stock drivers from the past couple of years: energy, china and IPO’s. Three categories that are not unfamiliar on this blog (especially in 2007). It does scare me that Cramer (profit jinx) mentioned Gushan today but I will ignore the superstitions and continue to follow the stock while grabbing shares.

A second firm from Wall Street decided to initiate coverage on the stock with a buy recommendation. I labeled the stock a buy the day it debuted and maintain that analysis based on my fundamental and technical research:

“The Next Chinese IPO:
Now it’s time to jump on the next IPO that’s about to debut on New York Stock Exchange under the symbol “GU”. Chinese biodiesel fuel producer Gushan Environmental Energy Ltd. (GU) said it plans to raise about $171.6 million in an initial public offering of American Depositary Shares (ADS).”

Earnings Estimates:
FY 2007: $1.02E
FY 2008: $1.52E +49%
FY 2009: $2.00E +31%

Revenue (in millions):
2002: 5,258
2003: 10,422
2004: 23,793
2005: 49,840
2006: 113,891

Net Income:
2002: 2,080
2003: 5,361
2004: 10,245
2005: 21,069
2006: 45,972

PEG Ratio: 0.77x
P/E Ratio: 38.49

Why the surge today? The stock seemed to be following a surge in the Shanghai market.
Another stock of related interest higher today: YGE, up 13.38% on volume 60% larger than average66666666666666666666666
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Comments

  1. Chris,

    So you’re a buyer…but up until what point? It looks like there was resistance around 11.8032, so if you consider the high of 11.99 on 1/4 as the left side of the cup, would you consider 12.05 the buy point (I always forget…is it 5 cents or 10 cents? And off the high or the open/close?)?

    Thanks!

  2. Jeff,
    It’s not a cup shaped base – too short in timeframe. I am a buyer based on potential, earnings and sales. The chart is too young to study.

  3. Jeff,
    The pivot point is $0.10 according to CANSLIM.

  4. Jeff,
    Could you go deeper and tell more about what the fundamental story is here.The chart is not that convining considering the bear drop in China and you know everything goes to hell, even the best stocks when markets drop.

  5. Awesome as always! Chris, you should be running your own fund 😉

  6. Chris, I just came across your sight while looking for an imagine on google. Just a quick view … it looks pretty awesome.

  7. wait, what says:

    It is at $10 now. Going the wrong way.

Trackbacks

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  2. […] sell this sucker prior to a full loss if it starts to drop. I have already sold a position from earlier in the year when it turned against me but felt the need to jump back in for a potential longer term move. I […]

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