TMFBabo (100.00)

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GFRE uplisted today!

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October 27, 2009 – Comments (6)

Here's a pick I intend to keep open for a long time. I highlighted it as one of my favorites in this post and it is my next pick for AllStarPortfolio. It is a former .OB Chinese micro that finally uplisted to the NASDAQ today. Anyway, pitch below:

Gulf Resources Inc. now trades under the ticker GFRE on the NASDAQ and was previously GFRE.OB and GRUS.OB on the OTC BB. After a 1-for-4 reverse split, GFRE closed Tuesday 10/27/09 at $9.59. All the financial statements are still in pre-split terms, so this pitch is based on the pre-split price of $2.40.

Let’s delve into the financial statements. The first relevant annual statement was submitted in 2006, so that will be the furthest I will go back.

First, check out the very nice sales growth:
2006: $31.7M
2007: $54.2M
2008: $87.5M

Year over year sales:
Q208: $23.8M
Q209: $29.6M

Next, check out annual earnings:
2006: $0.18
2007: $0.51
2008: $0.90

Year over year EPS:
Q208: $0.25
Q209: $0.29

Without issuing too many shares, equity has grown quite nicely. Book value is below. Check out the 99% book value growth from 2007 to 2008:
2006: $0.38
2007: $1.06
2008: $2.11

This company is highly profitable and growing quickly. With over $38M in cash and only 23.5M in total liabilities, it's very healthy as well.

6 Comments – Post Your Own

#1) On October 27, 2009 at 11:05 PM, mustangsb93 (21.18) wrote:

Wow! Sounds nice! Good find. Thanks for the info. I will definatly look into it!

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#2) On October 28, 2009 at 10:03 AM, sentinelbrit (93.25) wrote:

I was thinking of buying this but it's too risky for me. It looks like the stock is dependent on 1) the company being able to buy the lease from companies who are not approved to mine bromine, 2) the price of bromine (don't know how volatile it is), 3) the chineese economy and 4) a very small number of customers continuing to buy its products.

Hope it works out for you!

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#3) On October 28, 2009 at 12:36 PM, TMFBabo (100.00) wrote:

As much as I love GFRE, I still diversify and only hold a reasonable amount of this stock. That is my general approach to OTC and exchange-listed micros.

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#4) On October 30, 2009 at 12:02 AM, zCreator (93.48) wrote:

I read your blog posts a lot and enjoy learning from them. I have a question regarding a stock. PRGN, I bought some shares recently and was curious as to what your opinion on it was.

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#5) On October 31, 2009 at 1:40 PM, TMFBabo (100.00) wrote:

From what I can see, almost every shipper seems to be trading at an attractive valuation. I stopped holding shipping stocks a few months ago when I went all-out into the OTC market, but I liked ESEA, PRGN, and OSG among the drybulk shippers.

It seems there's an oversupply of ships in the world, and many shippers are still adding to capacity even though that might be the case. I have not studied the macroeconomic factors that may be pertinent to shippers, but it seems they may not be as undervalued as they appear based on their financial statements, stats, and ratios.

If I were to buy a shipper today, I believe PRGN would be among the few companies I'd be considering. I'd look into the industry more though, because more than one blogger has posted on the possible value trap that shippers might be at the moment.

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#6) On November 20, 2009 at 12:02 PM, XMFConnor (97.81) wrote: