Puda Coal is a great play on the Chinese recovery. We know that the industrial sector is very cylical, and steel production is generally a great way to play any recovery. I don't like US steel companies yet because of this latest job number, but the Chinese recover seems to be expidited by aggressive government action.
Let's take a look at Puda Coal's chart:
This is a chart from Yahoo Finance
We see the obvious upward trend of support. At the same time, there is a slight rising wedge, as the resistance gets closer to support, but as it stands, a reversal shouldnt manifest for a couple months at least. The stock is coming off a bounce on the support line. Also, the arrows are where the generally bullish volatility pinches have occured. We can see that after each pinch, there is a significant pop in the stock.
These are classic examples of bullish technicalls.
But of course, we can't look at technicals alone. Puda Coal has positive EPS and a relatively cheap P/E ratio.
What initally interested me in this stock was actually Warren Buffet's buy of Burlington Northern Santa Fe Corporation (Public, NYSE:BNI). Yes, it was a bet on the US long term. However, the consensus seems to be that Buffet is betting on the Chinese recovery with his buy of BNI. I was looking for a recovery stock with lots of room to grow. I'm confident Puda Coal's tiny 110M market cap is going to grow quickly, especially because of its consolidation of eight Chinese coal mines, just over a month ago.
I still like Ford Ford Motor Company (Public, NYSE:F), and Nordstrom, Inc. (Public, NYSE:JWN).
Also, I covered my shorts of CIT Group Inc. (Public, NYSE:CITGQ) on Friday, and I think that's what most investors will be doing in the next few days. If you're looking at a quick profit, take a gander at CITGQ. I would never "recommend" such a terrible company, but it's worth a look.
Good Luck,
Samba
No comments:
Post a Comment