Aug 27, 2010 10:04 AM PDT
Propelled by this news is China's auto sector and Wonder Auto Technology Inc., (WATG) http://www.watg.cn/ which has been a favorite of mine.
What a great way to highlight and push a sector: General Motors (GM) said today it expects to do better in China's auto market in 2010 than previously thought (the Buick brand is big in China) outperforming the country's overall market in the first three quarters. GM sold 55.6% more vehicles in China from January to September, leading a 34.24 gain in the overall market. GM may sell more than 1.6 million vehicles in China this year, in line with his earlier forecast of more than 40 percent year-on-year growth.
WATG 52-Week High Today
WATG picked up over 13% today ($13.64) and I don't believe it is due to the Company presenting at an investor conference in Miami. WATG makes electrical parts for cars and acquired a rods and shafts business last month. China is looking at an 8% growth this year and news out yesterday said the country now has 132 billionaires; only second to the U.S.
Cars are a 'Big Part' of the new china and Top-Line; WATG was ranked second in sales revenue in the China market for automotive alternators and starters in 2008. Where can GM buy those Buick parts? In the global recession, WATG brought in a positive $0.75 diluted EPS on $163 million in trailing twelve month revenues. Looking at the chart, I believe WATG has yet to reach a plateau that one could consider a floor and as revenue producing contracts continue to come in from new revenue streams, like rods and shafts, I think $15 could be its level with $20 being a 6-Month ceiling.
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WATG HCSG
One of the first S&P SmallCap 600 companies to report earnings this early in the season late yesterday is Healthcare Services Group Inc., (HCSG) http://www.hcsgcorp.com/ . The stock picked up a nice gain this morning to trade above $20. I think this stock will hit or top $25 when the healthcare bill is passed in the next three months.
HCSG has good Q3 2009 numbers (below), but I like this stock because of the business the Company is in: Services. HCSG does the grunt work: it provides housekeeping, laundry, linen, facility maintenance, and food services to nursing homes, retirement complexes, rehabilitation centers, and hospitals. And HCSG does it big time: 2,100 facilities in 47 states. What a growth potential: New clinics, new primary care offices.
HCSG also delivered a positive $0.64 diluted EPS on trailing twelve month revenues of $638 million during the 'Great Recession' and here are its Q3 09 revenues and earnings released today: a 17% increase in revenues (top-line driven) with net income for the quarter increasing 19% per diluted share. My only reservation is that short-sellers hold a little over 4% of the float, but I believe that that figure will drop after the Q3 results have affect. BUY.
Little known, but heavily traded Cepheid (CPHD) http://www.cepheid.com/ made an 11% jump this morning to $14.30 ($1.40 off its 52-week high) on an upgrade from 'Hold' to 'Buy' from Needham & Co. This is a 'Closely Watch' stock for me. CPHD is a genetic testing company. And they are getting better at it all the time. With an FDA okay in late September, CPHD produced a diagnostic test to detect an increased genetic risk of developing blood clots; a test now delivered in 30 minutes.
That's where I think the top-line dollars will flow in: speed-of-delivery. The CPHD GeneXpert and Xpert product lines can drive sales by test and test system providers performing tests faster and faster; no more two or three days delay. A half hour. Great promise here. CPHD releases it Q3 2009 numbers after the close of the market on October 28. CPHD has a lot of naysayers and leveragers with a short percentage of float above 10%, but if the Q3 numbers are good and the Company's BioThreat unit can produce good news; I believe a lot of the short-sellers will buy-out early to cover their... investments.
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CPHD NICE
And just a passing note Looking Forward on a company that not to long ago was a true SmallCap: NICE Systems Ltd., (NICE) http://www.nice.com . NICE now trades in the $32 range with management saying yesterday its will be deploying the Company's video security system on the Beijing subway system, Line 15 of the Beijing Metro, which is under construction in the city of Beijing. The subway line will run more than 40 miles with 24 stations. NICE has over 24,000 customers in more than 150 countries, including more than 85 of the Fortune 100 companies. For those of you who bought at $22, congratulations and for those of you looking for a new MidCap...
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