Escape to the Orient

Written by GSCR Staff   
Wednesday, 29 April 2015 06:59

We started off the week with somewhat of a gloomy outlook for U.S. stocks as we predicted that the summer sell off season ‘may’ start early. 

Add in yet another city under turmoil with police confrontation and riots, and getting away could be in order.

Don’t look now but the Far East has been on fire in 2015. For the most part this includes China and several emerging markets.  Below is a small sample of some of these markets using ETF’s as proxies.

 

Sample Asian and Chinese ETF 2015 YTD Performance

 

MM.04.29.15.asianetfchart

 

We may have found an undervalued stock based in China listed here in the U.S. that could be a cheap way to get in on a run that does not appear to be losing steam. Highpower International, Inc. (NASDAQ – HPJ - $4.37) is a solid industrial product play. The Company manufactures and trades in nickel metal hydride rechargeable batteries used to power various portable electronic devices. It produces consumer batteries in A, AA, and AAA sizes in blister packing, as well as chargers and battery packs, and industrial batteries, which are designed for electric bikes, power tools, and electric toys.  The Company also manufactures lithium-ion and lithium polymer rechargeable batteries for applications in laptops, digital cameras, and wireless communication products.  In addition, it recycles scrap battery materials through outsourcing and resells the recycled materials.

 

For starters our forward vs. trailing P/E metric is in check with the numbers coming in at 9 and 24 respectively.  Additionally, an Enterprise Value to EBITDA of 12 indicates value for investors as well as any buyers.  An operating margin of over 2% may seem trivial, but it is 100% more than the industry average.  Finally, on the technical front, HPJ has broken back to the 50 Relative Strength Index value from an overbought signal.

 

Asian emerging markets including China are forecast anywhere from 5% to 7% GDP growth for 2015.  Highpower is set to capitalize on this growth.  Consensus analysts’ estimates are for nearly 25% growth in top line revenue for this year.  We think HPJ can bounce back to 52-week highs near $8 this year.

 

Have a great day!

 

Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.

Disclaimer:

This Market Monitor blog was prepared for informational purposes only. Goldman Small Cap Research, (a division of Two Triangle Consulting Group, LLC) produces research via two formats: Goldman Select Research, which typically highlights small cap companies, and Goldman Opportunity Research, which features micro cap companies in a sponsored research format. Thus, the Select product reflects the Firm’s internally generated stock ideas while the Opportunity product reflects sponsored research reports. 

Goldman Small Cap Research is not affiliated in any way with Goldman Sachs & Co.

It is important to note that while we may track performance separately, we utilize the same coverage criteria in determining coverage of all stocks in both research formats. Please view the company’s individual disclosures for each engagement, which can be found in each company-specific report. All information contained in this blog, newsletter and in our reports were provided by the Companies or generated from our own due diligence. Our analysts are responsible only to the public, and are paid in advance to eliminate pecuniary interests, retain editorial control, and ensure independence. Analysts are compensated on a per report basis and not on the basis of his/her recommendations. 

The information used and statements of fact made have been obtained from sources considered reliable but we neither guarantee nor represent the completeness or accuracy. Goldman Small Cap Research did not make an independent investigation or inquiry as to the accuracy of any information provided by the Company, or other firms. Goldman Small Cap Research relied solely upon information provided by the Company through its filings, press releases, presentations, and through its own internal due diligence for accuracy and completeness. Such information and the opinions expressed are subject to change without notice. A Goldman Small Cap Research blog, report, note, or newsletter is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed.

This blog does not take into account the investment objectives, financial situation, or particular needs of any particular person. This blog does not provide all information material to an investor’s decision about whether or not to make any investment. Any discussion of risks in this presentation is not a disclosure of all risks or a complete discussion of the risks mentioned. Neither Goldman Small Cap Research, nor its parent, is registered as a securities broker-dealer or an investment adviser with FINRA or with any state securities regulatory authority.

ALL INFORMATION IN THIS BLOG, REPORT OR NEWSLETTER IS PROVIDED “AS IS” WITHOUT WARRANTIES, EXPRESSED OR IMPLIED, OR REPRESENTATIONS OF ANY KIND. TO THE FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE FOR THE QUALITY, ACCURACY, COMPLETENESS, RELIABILITY OR TIMELINESS OF THIS   INFORMATION, OR FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES THAT MAY ARISE OUT OF THE USE OF THIS INFORMATION BY YOU OR ANYONE ELSE (INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, LOSS OF OPPORTUNITIES, TRADING LOSSES, AND DAMAGES THAT MAY RESULT FROM ANY INACCURACY OR INCOMPLETENESS OF THIS INFORMATION). TO THE FULLEST EXTENT PERMITTED BY LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE TO YOU OR ANYONE ELSE UNDER ANY TORT, CONTRACT, NEGLIGENCE, STRICT LIABILITY, PRODUCTS LIABILITY, OR OTHER THEORY WITH RESPECT TO THIS PRESENTATION OF INFORMATION.

For more information, visit our Disclaimer: www.goldmanresearch.com

 

Add comment
  • No comments found