Wednesday, July 28, 2010

Trade: Bought Lihua International

Bought Lihua International (LIWA) at $8.76 for the Opportunistic Growth Portfolio. LIWA is a producer of refined copper products in China. Yesterday they announced the opening of a new copper smelter that will double capacity. Today the stock fell to below the opening price prior to the announcement so we used the weakness to buy right at the moving averages.

As I'm about to report on, the China markets have made a dramatic move off the bottom this month yet China stocks that trade in the US continue to lag. LIWA is a primary laggard and trades at roughly 4.5x the estimated 2011 earnings of $2. Considering LIWA makes around $1.2 on existing capacity I'd expect earnings for 2011 to double with capacity. Doesn't really matter with the stock price stuck below $9 whether they earn $2 or $2.5.


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