China Nepstar Chain Drugstore Ltd. (NPD), China Jo Jo Drugstores, Inc. (CJJD) and China Yongxin Pharmaceuticals, Inc. (CYXN)

Of course, I meant “LEGAL” drugs……The china pharmaceutical industry is an exciting sector with a great deal of competition and no true national chains.  The market is, in fact, highly fragmented and while NPD has over 2,500 stores, it owns only around 1% of the overall market.

These stocks are three of the most popular ones and they have been penny stock darlings for quite some time.  They are all volatile stocks that could be in play at any time based upon news or general China sentiment

China Nepstar Chain Drugstore Ltd. (NPD)

An earnings release this week could make things interesting for NPD.  It is scheduled for August 11th…this Wednesday.  The stock has been on a flatline for the past several months forming a durable base at around $3.  The bollinger bands have formed a tight convergence around the stock which could portend some move off this base.  Here is the chart, so you can see what I mean.

NPD is phenomenally profitable and has a very strong balance sheet.  Debt is classified as short-term debt and is significant ($68 Million), but cash ($200MM) and other debt-coverage ratios make the high debt a non-factor.

China Jo Jo Drugstores, Inc. (CJJD)

The story for CJJD is all about growth.  They are the smallest of the three companies profiled today and on the largest growth curve, but growth is easier when you are going from 29 stores (a/s March 2010) to 60 (projected by March 2011).  Having said that, CJJD is also showing (unaudited) income statement numbers that are impressive….55 MIllion revenues for ye 3/31/10 with 12.7 EBITDA.  Balance sheet is not as strong, but there are no big concerns.

China Yongxin Pharmaceuticals, Inc. (CYXN)

CYXN is a bit different from the other two because of its range of services and products…in addition to running its 79  retail stores (a/o 12/31/09), they are also heavily involved in pharmaceutical distribution as well as selling their own line of herbal remedies and medicines.  Their unaudited numbers are good, too.  Not as good as the other two, but still respectable.  For the y/e 12-31-09, the company booked $47 million top line and showed EBITDA of $7.7 million.

I would recommend staying away from CYXN until the volume issue is resolved (I have calls out to the IR firm) to try and get some details on their recent trading patterns.  CJJD is a potential short to me, but on such low volume, any position is a HUGE risk.  NPD has earnings coming out this week.  There has been no runup to earnings, so I can’t even begin to call how this will trade on Wednesday.  I like NPD, personally, but will not be trading it until I know more.

Good Luck and Great Trading,

Jeffrey Dean

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Disclaimer

DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice. Neither InvestorSoup.com nor its affiliates have a beneficial interest in the mentioned company; nor have they received compensation of any kind for any of the companies listed in this communication. The information contained in our report is not an offer to buy or sell securities. We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

HEMA, FVRG, TGLN, VIVK, TADF, HOMS, RMLX, AMCG, CBAI, ELCR

I must admit that I am an alternative energy junkie.  I love all things alternative:  I love the almost infinite variety of wind, solar, biofuel, CO2 to gas technologies that are out there.  Each one of them is exciting on its own merits and each has a claim to be “The One” that makes it to the next level.  Could RZ be one of the winners?

Raser Technologies, Inc. (RZ - NYSE) is (from RZ’s website) an environmental energy technology company focused on geothermal power development and technology licensing.

RZ has two divisions:

1. Raser’s Power Systems segment is seeking to develop clean, renewable geothermal electric power plants and bottom-cycling operations, incorporating licensed heat transfer technology.
2. Raser’s Transportation and Industrial segment focuses on extended-range plug-in-hybrid vehicle solutions and using Raser’s award-winning Symetron™ technology to improve the torque density and efficiency of the electric motors and drive systems used in electric and hybrid-electric vehicle powertrains and industrial applications.

RZ is making only nominal revenues with large losses every quarter.  Looking through their website, press releases and 3rd party articles on them is impressive.  They really appear to have some great technology and prospects.  The Evergreen Clean Energy LLC joint venture seems to hold great promise.  Read the release here.  Evergreen, a newly-formed alternative energy fund, has agreed to fund several RZ geothermal projects in the U.S. The recent news of the appointment of a new CEO, Nick Goodman, didn’t do much for the stock,  Mr. Goodman seems to have a solid resume and could be just the guy that the company needs….time will tell.

But, since we live in the real world, let’s talk RZ as it stands right now.  RZ has, according to its own balance sheet, maybe two quarters of life left based upon the present cash burn.  The liquidity ratios stink and the company has a great deal of debt (more than it can comfortably service along with huge R & D expenses each Q).

The chart, on its face, doesn’t offer much hope either. The prolonged bearish slide doesn’t appear to be slackening.  Or does it? Candlestick chart analysis gives us some insight into the chart.  Most of the sticks during this decline were long bodies or Maurbozo’s (in a declining chart, that means that sellers ruled).  Buyers put little resistance and the stock was bid down every day significantly.  Except, that is, for the last two days.  We are actually seeing tails develop on the candles which means that buyers and sellers are struggling over the stock.  In fact, yesterday’s candle shows that the sellers drove it down, but the sellers brought it back up to close near the top of its trading range.  The key for RZ is to watch for confirmation that the sellers are getting “exhausted” and that the buyers are coming back in. The oversold stochastics is an important indicator, but until the MACD intensity diminishes, the stock could continue to fall.

Here is my annotated chart:

Any good news could really send this one soaring.  I recommend that traders watch this one and keep it on the radar.  Technology-wise, RZ appears to be a “good horse to back”.  If they can get some financing for general operations and if the Evergreen deal comes through, this could be a HUGE winner.

Lots of variables, though…..

Good luck and good trading,

Jeffrey Dean

When you have been an investor/trader as long as I have, you tend to create favorites. I have my favorites certainly, stocks like JDSU, LGDI, TASR and today’s blog topic: American Oriental Bioengeneering, Inc. (AOB).  I have been aware of AOB for years and have traded it/blogged it to great success.

In fact, it was one of the first stocks that I blogged on this site.  You can read my blog here. I was right about it then, as this chart would indicate.  AOB was profiled around $4.25 and soared to $5.70 in about a week.  I was right then….I wonder if I can be right again.

Headquartered in China and with most of its sales in China, AOB’s develops, manufactures and sells plant-based pharmaceuticals, nutraceuticals and food supplements. Its product are designed to treat a wide variety of ailments under a number of brand/trade names.

The company was founded in 2001 and has enjoyed a great run.   Upon reviewing the financials, I can see that AOB makes money! Every year for the last three years, they have posted a profit.  Sales and profits have slowed down somewhat this year, but AOB is on track to post another profit for 2009.  The balance sheet is strong with great debt coverage ratios.  Debt is high at $116MM (33% of equity), but the company’s cash balances and cash flow are sufficient to service the debt easily.

Here is a two-month chart that shows the recent trading action.

AOB is a great radar stock…..It has shown strong volatility in the past and looks to me like it might be ready for a bounce.  It will be instructive to see if it will hold above the current support level.  Any break below it and the stock should be avoided.

Good luck and good trading,

Jeffrey Dean

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DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice. Neither InvestorSoup.com nor its affiliates have a beneficial interest in the mentioned company; nor have they received compensation of any kind for any of the companies listed in this communication. The information contained in our report is not an offer to buy or sell securities. We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

I did a screen for small cap stocks on a losing streak of over 7 days and came up with several Junior Gold stocks:  Golden Star Resources, LTD (GSS) and Apollo Gold Corporation (AGT).  One is a company that I would suggest putting on the radar and the other is one that I be very cautious with.

Part of the reason that these companies are here is because of the slide in the price of Gold.  Once gold resumes its upwards momentum, stocks like these could become supercharged

Be careful with  Apollo Gold

Apollo Gold is a junior miner that is increasing revenues incrementally, but not making any money while doing it.  Their losses, through 3 quarters, is almost $38MM.  I realize that a great percentage of that are paper losses from writedown of assets in 2009.  Then, the theory goes, if they have a strong balance sheet things should be o.k.  Unfortunately, they don’t have a strong balance sheet.  They have lousy liquidity ratios and  long-term debt that is due and payable and has been accelerated.  Things are so bad that the company has put its 50% interest in the Montana Tunnels Mine property up for sale.

Here is the chart with my annotations:

I would never suggest holding AGT long-term, but you can play the volatility.  This is not a stock for the faint of heart.

A Golden Star?

Like AGT, GSS can show a steady climb since December of 2008 when it was trading for only 50 cents.  GSS is significantly larger than AGT and could book over $350MM in sales for 2009.  However, they are showing losses quarter over quarter, too.  Their balance sheet is not pristine, either.  Their ratios are better, but GSS has taken on a great deal of debt.  The company is trumpeting the fact that 2009 was their best year ever, but they need to continue to increase revenues and get a handle on expenses for the investing public to be convinced.

GSS should be watched to see if it continues to decline and touches the next support level.  I don’t think it will. Seller exhaustion may have set in and prices could rise.

Both companies, I can only imagine, are hoping and praying that Gold prices come back.  And, it is not like gold prices have crashed, either. The spot price at 10:33 a.m today as I was writing this was $1,098.55.  But, in the mind of traders and investors, gold prices are “DOWN”.

Both are good radar stocks and could run on news specific to the company or about gold in general.

Good luck and good trading,

Jeffrey Dean

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DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice. Neither InvestorSoup.com nor its affiliates have a beneficial interest in the mentioned company; nor have they received compensation of any kind for any of the companies listed in this communication. The information contained in our report is not an offer to buy or sell securities. We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

Motorsports are hot! In fact, $31.5B Hot! (source: Motor Industry Council) That is how large the U.S. market for motorcycle/ATV sector is.  Today’s alert company is already grabbing big handfuls of that market and has plans to get even larger.

So “Fasten your seatbelt” for my next pick: San West USA, Inc. (SNWT). continue