5-4-09 - Combining Two Hot Sectors Makes Gold Horse Intl (GHII.OB) Perfect

Today was an explosive day in the stock market. Most every stock was up and certain sectors have been on quite a run. With so many stocks significantly coming off of their bottoms, it will be tougher and tougher to find perfection, but I really feel that this next stock is an easy double from here. This stock is definitely in the right space as it happens to combine in my opinion the two hottest sectors in the market right now: China and Real Estate. It had a big day today, but I think there's still a lot left in it. In this post I'll float back into pennyland and show that the next perfect stock is Gold Horse International (GHII.OB).

Gold Horse International is engaged in three business sectors in China: construction, residential and commercial real estate development, and hotel management. The stock was taken down steadily and is just beginning to see the light of day despite great earnings.

Fundamentals

In the wake of the economic downturn, the Chinese government has vowed to do everything possible to stimulate its economy. Part of that stimulus plan is to foster construction and real estate. 4 trillion RMB is being released to encourage affordable housing, rural development and infrastructure projects. GHII.OB is set up perfectly to capitalize on these measures.

Earnings

GHII.OB's 2008 revenue was around $67 million, which yielded an eps of $0.10. The company has already completed 2 quarters in 2009 and has provided guidance of $90 million for the year. Book value is $0.43/share. These financial indicators are impressive for a stock currently sitting at $0.13/share.

Technicals

Check out GHII.OB's 1-year chart below:




As you can see, GHII.OB traded over $1.00/share less than a year ago. After consolidating for months, today's 44% move looks to be the start of a breakout.

Catalysts

I've already mentioned that Chinese stocks are hot right now. With the promising China manufacturing numbers that were release today regarding expansion for the first time in 9 months, I predict that you could see some crazy stock run-ups the next few weeks in Chinese stocks that could rival what we saw in late 2007.

Also, 5/18/09 is a major investment conference focusing on Chinese companies in New York. With all the money that's still waiting on the sidelines, this could be a great opportunity for Gold Horse to lock in some big money ownership, which will inevitably push up the stock price.

Conclusion

Stocks have made a tremendous run and we look to be primed for DOW 9000. As we inch closer to that number, look for many stocks to give up some gains soon as profit taking occurs. However, GHII.OB is nowhere close to being overbought and appears to still have room for at least a double based on this blog's strict criteria. Gold Horse International (GHII.OB) the next perfect stock.