http://messages.finance.yahoo.com/Business_%26_Finance/Investments/Stocks_%28A_to_Z%29/Stocks_C/threadview?bn=93442&tid=1213&mid=1213
CGA is unusual in that they have given guidance 3 years out for sales (tons). 15K tons year just reported and close to 55K tons 3 years from now.
I like to use what I call reasonable expectations to get a feel for what the stock could go to. In 3 years, say they triple sales tons to 45K, (not quite full capacity) Triple earnings of .62 per share (.62 is on current share count after dilution not the .78 reported YE before dilution) They are moving into higher margin products, so say 2.00 a share. Growth will probably be slowing by then, no longer justifying a PE of 20. Say 10 to 15 depending on growth expectations at that time. (Remember this is a Chinese small cap) That results in a stock price of 20 to 30. A compound annual rate of return between 17 and 34%.
If demand and growth remain strong resulting in additional production expansion, who knows how high the stock could go. Me, who was lucky enough to get in early with 5,000 shares at an average of a little over 3 bucks, and planning on holding for quite a while.
CGA is unusual in that they have given guidance 3 years out for sales (tons). 15K tons year just reported and close to 55K tons 3 years from now.
I like to use what I call reasonable expectations to get a feel for what the stock could go to. In 3 years, say they triple sales tons to 45K, (not quite full capacity) Triple earnings of .62 per share (.62 is on current share count after dilution not the .78 reported YE before dilution) They are moving into higher margin products, so say 2.00 a share. Growth will probably be slowing by then, no longer justifying a PE of 20. Say 10 to 15 depending on growth expectations at that time. (Remember this is a Chinese small cap) That results in a stock price of 20 to 30. A compound annual rate of return between 17 and 34%.
If demand and growth remain strong resulting in additional production expansion, who knows how high the stock could go. Me, who was lucky enough to get in early with 5,000 shares at an average of a little over 3 bucks, and planning on holding for quite a while.
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