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My 5 Favorite Stocks, Period.

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October 14, 2009 – Comments (34) | RELATED TICKERS: CHCG , ORSX

Here are my 5 favorite stocks:

CHCG.OB
CNOA.OB
GRUS.OB (formerly GFRE.OB)
LTUS.OB
ORS

These are the 5 most undervalued stocks on my watch list based on financials.  Beyond that, there's nothing more to say.

If you have any more suggestions on undervalued micro caps I might've missed, please feel free to mention them!

34 Comments – Post Your Own

#1) On October 14, 2009 at 3:33 PM, PaxtorReborn (30.06) wrote:

Thanks babo, I have some new stocks to look at

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#2) On October 14, 2009 at 7:30 PM, UltraContrarian (31.47) wrote:

We are on the same page babo.  I own the first 4 (and have made some pretty big gains, especially on GRUS) and have been trying to buy some shares of ORS as well.

Some other cheap Chinese microcaps: CHFI, CYXN, CPHI, CHBU, CDBT, CYIG, LWLL. A few more obscure ones: TGLP (if it ever traded), XNYH, CEDT (really tiny), CAGM, CSGJ, CCTR (based out of Texas, not sure what the deal with their ridiculously low price is, if I remember correctly they have a large warrant overhang.)

Some microcaps to keep on eye on outside China: HWG, DFNS, SVT, KYCN (looks like time to sell that).

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#3) On October 14, 2009 at 8:01 PM, Starfirenv (< 20) wrote:

I own my five favorites-period. Why are they on a watch list.
BTW- ORS has pulled back 10.5% after hours, Entry?

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#4) On October 14, 2009 at 9:07 PM, TMFBabo (100.00) wrote:

@Starfirenv: I guess I should've added that my watch list is 50+ and I own many of them.  I do own all 5 stocks listed.  ORS is down after hours, but that's after a monster up day.  I wouldn't be surprised if it dropped back to the $0.80-$0.90 range. 

@UltraContrarian: I agree about our styles.  I also own CYXN, CPHI, CHBU, and SVT from the ones you just listed.  I really like CDBT and XNYH at today's closing prices from the others you listed.  

Here are some others I already own that I still like at current prices: SGZH, CHME, JADA, AMGY, and IBCA.  I saw SGZH for the first time on Bravo's picks and AMGY on a blog post by throwerw.

If I remember correctly, you're also streetflame.  I favorited you after seeing your two blog posts on the pharma and bank micros.  I'm finding micro cap information a bit thin on CAPS since most of them are not rateable.  Are there any other sites you like to use to find them?

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#5) On October 14, 2009 at 9:09 PM, TMFBabo (100.00) wrote:

@PaxtorReborn: No prob! I remember replying to your GSIG post.  There should be plenty of micro caps in the comments section to dive into for new ideas.

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#6) On October 14, 2009 at 9:23 PM, Starfirenv (< 20) wrote:

BB thanks for clarifying, and congrats . The 10.5% pullback is down to 4+%. Wish I had your foresight!

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#7) On October 15, 2009 at 1:45 AM, throwerw (29.73) wrote:

this is a great list.  from what i know about chinese agriculture, CNOA would have to be my favorite.  i'm also holding some JADA and AMGY, and i was thinking about buying IBCA.  These things move so quick!  I had looked at SGAS before and was thinking about buying some, but it popped almost 50% in a day, wow!  I guess the best strategy is to spread the money around a lot because you never know which one will pop first.

I really like GU right now...

Thanks for your comments and thanks for sharing these picks, great stuff! 

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#8) On October 15, 2009 at 2:43 AM, throwerw (29.73) wrote:

CKGT... cactus cigarettes? haha, could this possibly be true?  i'm in china now, i'll do my best to find a pack.

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#9) On October 15, 2009 at 7:41 AM, TMFBabo (100.00) wrote:

@throwerw: No kidding on the sudden pops.  The biggest I personally experienced in my short time investing in individual stocks (~1 year) was FNET on 9/15.  It closed 9/14 at $1.25 and reached $3.90 the next day.  At the time, FNET had been averaging 130k volume, but 7.8M shares traded that day on no news.  The only possible explanation is that a mutual fund bought in.  I sold my shares at $3.11 and have been waiting for it to drop below $1.50, at which price I'd consider buying again. 

It seems you have to hope for these things to uplist to the AMEX or the NASDAQ and then hope that a mutual fund discovers them.  PUDA, CPHI, and a couple of my holdings have been uplisted recently, and it looks like GRUS is trying to make the NASDAQ sometime soon.  I like the mutual fund aspect, because their volume just causes amazingly awesome spikes in the price.  I'm sure the FNET spike will not be my last.  I'd bet that mutual funds aren't allowed to buy OTC stocks, or at least that it's frowned upon.

I like CKGT, but I liked it a lot more when I bought it well under $1.00.  I do like looking at it in my positions list, because its name is sorta ridiculous: China Kangtai Cactus.

It looks like we have similar tastes in our micro caps.  You and streetflame/UltraContrarian will probably inspire me to do more micro cap blog posts as I find some more of these things.  It might be a while though, because I'm having some trouble finding ones that are still very undervalued.

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#10) On October 15, 2009 at 7:55 AM, portefeuille (99.44) wrote:

It closed 9/14 at $1.25 and reached $3.90 the next day.

------------------------------

#7) On August 14, 2009 at 11:50 PM, portefeuille (99.99) wrote: FNET - 1.17 - outperform

#30) On September 15, 2009 at 10:36 AM, portefeuille (99.99) wrote: FNET - end outperform - 2.70 - new rating: market perform

------------------------------

(from here)

There are quite a few calls on "microcap" stocks among the calls I make here

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#11) On October 15, 2009 at 11:24 AM, throwerw (29.73) wrote:

true, things are definitely looking less cheap these days.  what sources do you use to find them?  i found ors and amgy on a graham screen, but obviously that screen misses a lot of stocks, otherwise i would have known about chinese microcaps sooner.  almost all of them have only been listed for a couple of years or so.  they were listed during the china bubble, and then the prices dropped ridiculously low when the market tanked.  but why would people sell so low?  in the case of ors, it was insiders who held most of the shares.  one guy was selling every day and another guy sold half the company at .65.  maybe the plan all along was just to list the company and dump shares.  then there is CHFI, which helped companies get listed in exchange for shares.  do they just start dumping as soon as they can to pay the bills?  maybe this could happen all over again, as more small chinese companies get listed during good times and then dumped by insiders during bad times. 

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#12) On October 15, 2009 at 12:40 PM, Bays (30.81) wrote:

Bullish,

Check out my latest blog on HE.TO

You might be interested.

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#13) On October 15, 2009 at 2:43 PM, TMFBabo (100.00) wrote:

@port: I have tried looking some of the ones up from your list, but you have so many small companies that have not earned income in the last several quarters.  I am confident that you will have market-beating returns, but we have very different styles, as I prefer my holdings profitable from the time I start owning them.  I'll take a second look and go through a lot more companies though, as you did rate FNET about the same time I bought it in real life.

@Bays: HE.TO looks like a decent value, but I don't have any global brokers.  The only one I even know of is E-trade Global.  Where do you buy Canadian stocks? 

@throwerw: I run my own value and GARP screens.  With micro caps, they seem to show up more on the GARP screens than on pure value screens (the ones I'd want to own, anyway).  I check Bravo's (and others') .OB green thumbs, streetflame had some good blog posts, and bradford86 had some very nice micro cap lists in his blogs before he stopped posting here on CAPS.  He still does have nice and more recent articles on thestreet.com and Seeking Alpha.  

Seeking Alpha in general has been a decent place to find them, but it's a big pain.  I mostly search the ones I already own and like, hoping authors will list ones I like as part of a bigger list of "undervalued Chinese micro caps" and whatnot.  I've been able to find a few stocks that I did end up buying in this fashion on Seeking Alpha.

Much like you, I've yet to find a screener that holds them all.  It's easy to determine if they're undervalued if only we could find them, right? If you'd be interested, please e-mail me at bullishbabo@gmail.com.  I feel we could have a long conversation spanning many comments, and I don't really want to hijack my own blog post doing that.  If you'd rather not, feel free to continue the discussion here anyway.

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#14) On October 15, 2009 at 3:36 PM, Bays (30.81) wrote:

I'm Canadian.

My broker allows me to trade on the NYSE, Nasdaq and TSE.

I basically only buy in CAD on the TSE.  I own one stock that's traded in USD, and the main reason I kept it was because of the dividend.

I'm heavily invested in commodities, thus making the TSE an ideal exchange.  My latest purchase is a company called Migao.  MGO.TO

I know TD Ameritrade allows you to buy stocks traded on the TSE as I set up an account for my American friend when the CAD was at $.78.   As you can imagine, he has amassed a small fortune from the rally paired with rise of the CAD.

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#15) On October 17, 2009 at 11:21 PM, streetflame (30.61) wrote:

"@Bays: HE.TO looks like a decent value, but I don't have any global brokers.  The only one I even know of is E-trade Global.  Where do you buy Canadian stocks?"

Interactive Brokers. You can trade stocks on dozens of different exchanges. They also have the highest short availability (including .OBs) and the cheapest margin of any broker I know of.  The fee structure is $.01 per share, which is great for higher share priced stocks.  I still keep an account at Ameritrade however, in order to trade lower share priced stocks.

Did anyone besides me enjoy CHFI.OB's 50% pop Friday?  If it did that on no news, imagine what it will do when they release a positive financial statement!

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#16) On October 19, 2009 at 12:59 PM, recklessfier (< 20) wrote:

Thanks for these microcap suggestions bullishbabo (and everyone else).

 

I'm wondering for these microcap stocks which can go up/down a lot in a day, do you guys typically to just buy and hold until they reach a certain value or do you try to sell after a high day (say over a certain percentage of gains) and re-enter again once it goes down a bit?

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#17) On October 19, 2009 at 3:48 PM, vinny3232 (< 20) wrote:

Hi Bullishbabo,

 I own LTUS and am seriously looking at CNOA.

 I am also looking at CNAM (not exactly a micro cap but a great value still) and SGAS.  Do you have any opinion on those two?  Your time and help is greatly appreciated.

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#18) On October 19, 2009 at 4:39 PM, TMFBabo (100.00) wrote:

@Bays: Where are good places to screen for Canadian stocks? I don't even know where to start...

@streetflame:I'll look into IB.  I thought long and hard about CHFI.OB before, but I don't like buying companies that haven't made money the past year.  It will cost me in the future, I'm sure.

@recklessfier: First of all, I hold these in bunches.  I think being diversified is important, especially for these less-regulated OTC stocks, some of which could be fraudulent.  

I personally hold the most undervalued stocks, no matter what they've done in the past.  If a stock doubles for me and is still more undervalued than my watch list stocks, I will continue to hold.  In the case of FNET from comment #9, I sold immediately on that day.  It depends on the situation.

@vinny3232: CNAM looks decent (not sure I'd buy it, personally).  Check out AMGY.OB, SUTR, and FRD also if you like small metals stocks.  SGAS.OB looks pretty good, purely based on financials.  I personally like this one more.

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#19) On October 19, 2009 at 9:33 PM, drnico (< 20) wrote:

this is a great post I love these kinds of companies they are so cheap but they do not appear in screeners. One I recently bought after a huge pullback was CSGH. I know I first heard of it through the Street but its still cheap and has great potential

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#20) On October 20, 2009 at 12:25 AM, streetflame (30.61) wrote:

"I thought long and hard about CHFI.OB before, but I don't like buying companies that haven't made money the past year.  It will cost me in the future, I'm sure."

Yes, this is one of the only stocks I own which is not currently profitable.  But in its defense, the Chinese government's IPO moratorium (imposed in the fall, lifted this summer) played a pretty big role in that. And I did my homework, reading the financial statements and all available news more thoroughly than with most of my holdings.

I still don't see any news for why it has gone up over 100% in the last 2 days.  I bought a couple of months ago around $0.20 and now it is $0.77.  Will probably sell a bit this week but hold onto most of it.  Book value has likely increased a large amount since the last statement, since they owned fairly big chunks of CNOA, HSYT and GFRE, all of which have huge gains. (And JADA, which cratered but is up 77% today. Why? Who knows!)

After the microcaps have run, maybe the more obscure nanocaps will start going.  For example things like CTXIF, XNYH, TGLP. CCTR, CSGJ, HHGM, HFGM, GEBD, CAGM, CYIG, CKGT.  Of course the ones that go months between trades will be a little difficult to find.

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#21) On October 20, 2009 at 12:27 AM, streetflame (30.61) wrote:

By the way the ORS pop on no news a few days ago (noted above) has settled back down.  I knew I shouldn't chase it.

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#22) On October 20, 2009 at 11:10 AM, SkepticalOx (99.45) wrote:

Any pitch why you like ORS so much?

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#23) On October 20, 2009 at 11:23 AM, Pennyperson (< 20) wrote:

CRTP.OB

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#24) On October 20, 2009 at 11:47 AM, Deepfryer (28.21) wrote:

They're not all micro-caps, but here are some of my favorite stocks: CWPWF.PK, CHSTF.PK, NRDXF.PK, APWR

Cheers.

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#25) On October 20, 2009 at 3:30 PM, recklessfier (< 20) wrote:

I just bought in ORS today at 0.93.  It seems to be continuing the trend up now.  The reason I like it is because of the low P/E compared to others in the industry, I'd like to hear others' thoughts on this too though.

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#26) On October 20, 2009 at 7:29 PM, Bays (30.81) wrote:

Bullish

I use Stockhouse.com

It's the best i've seen for Canadian stocks.

Let me know if you have any questions.

 

Cheers

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#27) On October 23, 2009 at 2:55 PM, traderbach (< 20) wrote:

Bays:- First of all thanks for contributing so lucidly to this discussion! 

Bullishbabo:- Thanks for starting the discussion.  For a rookie it's difficult to distinguish between the plethora of Chinese stocks period.  Really helps when the veterans narrow the field! Fools forever!

 

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#28) On January 11, 2010 at 10:02 PM, FleaBagger (29.45) wrote:

Excluding receivables and changes thereto, ORS has no assets and no revenue: just debt and empty promises. I wouldn't touch them with a ten-foot pole.

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#29) On January 11, 2010 at 10:21 PM, walt373 (99.76) wrote:

I agree - ORS looks dangerous. I trust cash flow more than earnings, especially when they tell very different stories.

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#30) On March 04, 2010 at 9:07 PM, vinny3232 (< 20) wrote:

Are you still sticking with those 5 as your favorite Babo?

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#31) On May 16, 2010 at 10:59 PM, megalong (< 20) wrote:

It may be a good time to buy CNOAE.OB.  They had a great year and judging by their announcement Friday are about to get back up to speed with the SEC.

LTUS.OB also had a monster quarter and a monster year.  These are two of my larger positions in microcaps.

Been a rough couple of months for Chinese small caps.  Not for the faint of heart.

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#32) On September 17, 2010 at 5:03 PM, bucheron (64.11) wrote:

Here's the list of stocks on the OTCBB with China (as of today) in their name, i will look at them and list those that I think are undervalued in a week or 2 from now :)  CAAH,CAGM,CBBD,CBLY,CCGY,CCLTF,CCTR,CDGT,CECX,CEDT,

CEHD,CFMI,CGND,CGPI,CGYG,CHBU,CHCG,CHDA,CHFR,CHFY,

CHGI,CHGY,CHHE,CHJI,CHLO,CHMD,CHME,CHNC,CHND,CHOR,

CHPN,CHRI,CHTL,CHWE,CHWM,CHYU,CIVN,CIVS,CIWT,CKGT,

CLGZ,CLTT,CMDI,CMKM,CNBI,CNER,CNGV,CNMV,CNOA,CNUV,

CNVP,CNWHF,CPAK,CPDU,CPDV,CPHB,CPLY,CPQQ,CREO,

CRJI,CRUI,CSAY,CSGH,CSGJ,CSNH,CSOF,CSOL,CVDT,CVPH,

CYIP,CYXN,DFEL,FCPG,GCHT,GCIH,IDCX,NWCH,SGZH,USCC,

XHUA

 

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#33) On September 17, 2010 at 7:57 PM, bucheron (64.11) wrote:

I'm done, it only took an evening, and it was fun :)

I screened for stocks that:

-Could be traded ( 1 day buy 10,000$ worth next sell it) 

-Are close to or under tangible book value

-Had positive income for the average of the last 5 years 

 A simple screen you could say, but it took out 90% of the stocks in the list. And before anyone says it, I know the list above doesn't include every Chinese stocks on the OTCBB but it's a good start!

Here it is :

CCGY, CCLTF, CCTR, CECX, CGPI, CHBU, CHCG, CHGI, CIWT, CNOA, CRUI, CSGH, CSGJ, CSOL(*), CYXN, SGZH

The one with the star is my favorite ATM. 

 Please give feedback if you evaluated any of these thanks. 

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#34) On December 17, 2010 at 1:51 PM, danoodle (< 20) wrote:

chcg seems down around 75% since babo said it was his favorite.  Good buy now?

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