Three Buys Analysts and Pundits Love: CHINA, CRME, CHOP

Trends, Charts and Exclusive Opinion

Three SmallCaps that Analysts and Pundits Love

CHINA: Makes a Move of Strength Repurchasing Shares

CRME: Merck Collaborator has a Deep Drug Pipeline

CHOP: Great Q4 Numbers and Steel, Steel, Steel

Up First this morning is CDC Corporation (CHINA) http://www.cdccorporation.net/ currently trading in the $2.76 range on a 3-Month average daily trading violume of 618,536 shares.  CHINA was trading under a $1 last March 09 and had a fairly steady through mid-July into the $1.50 range. CHINA then leapt up to nearly $4 a share, settled back down to the $2.50 level, and rode out the rest of 09 in that price range. CHINA has staged a strong surge towards $3 this month. CHINA has a 52-week high of $3.92 set on 07-27-09 with current trailing twelve month revenues of $334+ million.

This week CHINA management said the new media company and its subsidiaries have purchased an aggregate total amount of approximately 2.3 million shares of CHINA shares since Jan 08, at an average price of approximately $1.53 per share. Related affiliates have also purchased approximately 492,602 shares at an average price of approximately $2.80 per share. Buying back shares is a move of strength. CHINA had a strong Q4 and has turned itself around since 2008. CHINA is a short-term (6 Mo) ‘Buy’ consideration for me.

About the share repurchases, Peter Yip, CEO of CHINA said, “As we have said before, we clearly believe our shares are undervalued by the investment community. We have recently reported solid fourth quarter and year-end earnings with a 56 percent increase in fourth quarter Adjusted EBITDA.” CHINA Q4 09 Non-GAAP EPS were $0.40 vs. $0.11 in Q4 08. CHINA makes and sells media and business software applications.

CHINA 1-Year

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Next up this morning is Cardiome Pharma Corporation (CRME) http://www.cardiome.com/ currently trading in the $6.02 range on a 3-Month average daily trading volume of 211,828 shares. CRME was trading in the $3 range a year ago and in April 09, jumped into the $4-$4.50 levels. CRME held that ground for 8-Months with a few dips and spikes along the way. In Jan 2010, CRME shot past $5.50 and for the last 6-Weeks has held the $5-$5.50 ground as it moved towards $6. CRME has a 52-week high of $6.07 set on 03-10-10.

On March 9, CRME reported Q$ and FYE 09 results with net income for Q4 at $12.6 million ($0.20 per share), vs. a net loss of $8.3 million ($0.13 per share) for Q4 08. The net income in Q4 09 reflects recognition of revenue from CRME collaborative partner, Merck & Co. CRME recorded a net loss of $1.3 million ($0.02 per common share) for the year ended December 31, 2009, vs. a net loss of $60.4 million ($0.95 per common share) for the year ended December 31, 2008. The decrease in net loss for the year was largely due to the revenue recognized from the upfront payment of $60 million, the milestone payment of $15 million and a $7 million payment for shipment of clinical supplies from Merck.  

Not great numbers, better than 08, but CRME has Merck at its back and a large number of drug candidates in its pipeline including: Vernakalant (iv), which has completed Phase III (ACT 4) and in Phase III (European Comparator) trial which is used for the treatment of atrial fibrillation; Vernakalant (oral) has completed Phase IIa Pilot and Phase IIb study is used for atrial fibrillation; GED-aPC, an ongoing Phase I study product for multiple disease states; and Artesian Programs, which is in pre-clinical studies address diseases of cardiac dysfunction. Because of CRMEs depth in heart drug development and their potential commercialization by drug giant Merck, even near its 52-week high, CRME is a long-term (1-Yr) ‘Buy’ consideration for me. 

Finally today is China Gerui Advanced Materials Group Limited (CHOP) http://www.geruigroup.com/ currently trading in the $7.21 range on a 3-Month average daily trading volume of 266,485 shares. CHOP began trading on the NASDAQ Global Market Nov 10 (a senior market upgrade) in the $5 range and carried that value for the next 6-Weeks. CHOP then jumped up into the $7 in Jan 2010 and settled down to find a ‘floor’ for the next 6-Weeks in the $6.50 levels. CHOP staged a nice rally in late Feb that has carried it towards $8. CHOP has trailing twelve month revenues of $201+ million and a positive, corresponding diluted EPS of $1.01.

CHOP is a long-term ‘Buy’ consideration for me. Here’s why... its Q4 and FYE numbers and it processes steel in China. CHOP converts raw steel manufactured by third parties into high-precision steel products, such as steel sheets and plates, carbon steel, low alloy steel, stainless steel strips, and composite metal strips. CHOP also makes and sells finished steel products for the food and packaging and electrical appliance industries. Think... steel in China.  

This Week, CHOP reported its Q4 and FYE 09 numbers posting a Q4 revenue increase of 45%+ y-o-y, a gross profit increase of 70%+ and a net income attributable to common stockholders that increased 111.5% to $11.4 million, or $0.27 per diluted share, from $5.4 million, or $0.18 per diluted share. Impressive.

CHOP 6-Month

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