Stock of the Day
China Architectural Engineering, Inc.
Wednesday’s Closing Price: CAEI – $10.75
Sector: Industrial Goods
Industry: General Contractor
52-week Price: $4.75 – $27.25
June 6, 2008 Business Wire:
“China Architectural Engineering, Inc. (CAE) (AMEX:RCH), a leader in the design, engineering, fabrication and installation of high-end building envelope systems, today announced that the Company will ring the opening bell at the NASDAQ MarketSite in New York City’s Times Square on Thursday, June 12, 2008 at 9:30 a.m. EDT. The Company will commence trading on the NASDAQ Global Select Market under the ticker symbol “CAEI” on June 10, 2008.”
Although the company has “China” in its name, 45% of its revenue comes from Australia, Dubai, Qatar, the U.S. and Europe. Business week noted that growth should last well beyond the Olympic games this year because of robust orders in foreign markets.
The company’s order backlog is said to be at $100 million or 1/5th of its current market cap, a nice card to have up its sleeve in today’s world market.
The gap-up on the chart in May on huge volume concerns me when attempting to establish a solid risk/ reward trade strategy. I would like to see the gap fill prior to entering a position but I do see support along the 50-d m.a. or even $8 per share. I am going to set-up the “ideal trade” using the current moving average so we can cover a potential pull-back to the gap-up area noted on the charts.
Potential Trade Set-up:
Risk is set at 1.0% of total portfolio or $1,000 of $100k
Stop Loss is 12% or $6.16 ($6.00 area)
Number of Shares: 1,190
Position Size is $8,334
Risk is $0.84
Target is $13 for a 7-to-1 risk/reward ratio
Key Fundamental Numbers:
Market Cap.: $547M
Outstanding Shares: 51.1M
EPS Growth (MRQ): 178%
EPS Growth (TTM): 135%
Revenue Growth (MRQ): 76%
Revenue Growth (TTM): 50%
Earnings per Share (EPS):
$0.50 Next year, +39%; High estimate $0.64, +77%
$0.36 current year, +71%
$0.21 last year, +50%
$0.14 previous year