Check this out: China Agritech, a China-based company that makes organic fertilizers, has continued its skyrocketing gains.
Now, I realize that a lot of investors don’t even consider stocks that have already run up like this, because they figure it’s up too high already. I’ve seen too many stocks keep climbing after reaching a series of new highs. So I’m keeping an eye on this one, and I’ll be ready the next time it finds support at its 10-week moving average. That would show that professional investors are scooping up more shares, which, of course, is a vote of confidence.
The stock went public in September 2009. Newer issues often are among the market’s biggest gainers. Despite running up 136% since February 1, this one could still hold plenty of potential.
In addition to momentum and youth, China Agritech has the fundamentals behind it. Profit grew 46% in the most recent quarter, and sales growth has been accelerating. Wall Street sees earnings up 67% this year.
Believe it or not, even Chinese companies are looking to go “green” and be a little more environmentally friendly, since that’s something the market increasingly demands. So its focus on organic products doesn’t hurt.
Here’s a great article from Kevin Mulhern at Seeking Alpha, which describes some of the efforts China Agritech is taking to be more transparent. Kevin makes the point that the company wants to avoid some of the “shadier” suspicions that are often cast upon newer, smaller, Chinese companies.
Note that Kevin wrote that article back in December, two months before the current run-up began. That’s important, because it illustrates how stocks begin flashing signals of strength even before they begin big price moves.
China Agritech has a market capitalization of just $500 million, definitely on the lower side. You can see on its stock chart that it tends to trade in a volatile fashion, with some wide price swings. Always be a little more cautious with stocks like that, and if you own it, be ready to sell quickly if it falls sharply below your purchase price.
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