In this stock market, when you find a company that's doing well, it certainly is the exception. One great way to find the next bull market's winners i...
In this stock market,
when you find a company that's doing well, it certainly is the exception. One great way to find the next bull market's winners is to identify the strongest companies that are growing while the economy is actually in recession.
Once you find these companies, then you can keep a sharp eye out for a good entry point in anticipation of a change in investor sentiment.
One such company that fits the bill in my mind is China Sky One Medical, Inc. (NASDAQ/CSKI), which I wrote about in this column back in November.
This fast-growing company owns a portfolio of pharmaceutical companies in China. The company's business plan is to become a leading industry player in the sale and distribution of over-the-counter pharmaceutical products in that country.
I think that pharmaceutical-related investments are a great way to outperform in a weak economic environment. People still spend money on medicine when they get sick. They also spend money on diet pills and vitamins in spite of what's happening in the general economy. This is why China Sky One Medical just reaffirmed some solid growth expectations.
Currently, the company owns and operates Harbin Tian Di Ren Medical Science and Technology Company, Harbin First Bio-Engineering Company Limited, Heilongjiang Tianlong Pharmaceutical, and Peng Lai Jin Chuang Company Pharmaceutical Company.
Still small and at an early stage of development, in its third quarter last year, China Sky One's revenues grew 77% to almost thirty million dollars. Net income for the third quarter of 2008 grew 83% to $9.9 million, or $0.60 per diluted share, as compared to net income of $5.4 million, or $0.44 per diluted share, generated in the third quarter of 2007. That's some serious profitability on that amount of sales.
The company finished the third quarter of 2008 with fifty-one million dollars in cash (about $3.00 per share) and without any bank debt.
Recently, China Sky One Medical reaffirmed its revenue and earnings guidance for all of fiscal 2008. The company reported that it expects its total revenues to grow to between eighty-eight million dollars and ninety million dollars. Earnings are expected to be substantial, coming in between twenty-seven million dollars and twenty-eight million dollars.
Company management cited that, in spite of the global economic recession, its business continues to experience strong demand because of its reasonably priced pharmaceutical products. China offers national healthcare insurance, which helps with the cost of medicines. The company reported that one of its best selling products is its "Slim Patch," because people are actually spending money on shedding weight at the expense of other discretionary items and even in the current recession.
In any bear market, even fast-growing companies don't get the recognition they arguably deserve. And, to be frank, there are very few growing companies in a global recession. That's why I find it very useful to keep an eye on outperforming companies; because, when stock market conditions change for the better, so usually do the stock prices.
Profit Confidential
---
http://www.profitconfidential.com/
LOMBARDI PUBLISHING CORPORATION
News, Analysis, and Information Services Since 1986.
One Million Customers in 141 Countries.
Lombardi Publishing Corporation
Financial Publications Division
350 Fifth Avenue, Suite 3304
New York, NY 10118-3304
---
Copyright 2008; Lombardi Publishing Corporation. All rights reserved. No part of this e-newsletter may be used or reproduced in any manner or means, including print, electronic, mechanical, or by any information storage and retrieval system whatsoever, without written permission from the copyright holder.
