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China has been dismissed by U.S.investors somewhat lately..”We dont trust them” we say or their government such as Chinese premier Wen Jiabao saying things similar to ” we are a little worried and would like to call upon the U.S. to honor its word and stay a credible nation and ensure the safety of Chinese assets”.The Chinese arent afraid of our government paying them back –they are worried the impending decline of the US dollar will hurt their values when they sell our treasury bonds..Our treasuries are threatened when the Chinese decides that our impending problem with inflation implodes enough for them to sell our treasury bonds before this deep recession ends..So why then have the U.S. investors abandoned the Chinese stocks that were once a great part of many institution’s portfolio..It really is a matter of the runup of stock values where we had sold those assets and we have forgotten that market thinking its still overbought..How about now oversold…

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As I have eyed that market–I like to every now and then make a small claim or speculative bet on a potential growth stock..The one stock I see is a very small cap (just under 70 million in market cap!) called China Green Agriculture..Ticker symbol–CGA under AMEX stock exchange..For years,the Chinese have invested in our U.S. treasury bonds until Nov 10..On that date,the Chinese Government stated they were going to invest 586 billion in their own country..The Chinese Government wasted no time in this initiative increasing spending by 30% over the previous year in the months of January and February of this year..Railroad investments tripled in that same time frame and banks there lent more in a 3 months time span than the last 12 months..However,the Chinese people our very frugal in their spending..The country has always relied heavily as an export nation..The global cutback in imports from other countries has left a deep hole in China’s economy..Premier’s Wen has a plan to raise the income in wages there and increase spending on culture,tourism,internet and recreation..China is cash rich in their people and government..Since their government operates under a different capitalistic one than ours,there is less interference there in general than ours..

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This lead me to many stocks at great valuations..One we have studied is the above stock CGA..CGA manufactures and distributes humic acid organic liquid compound fertilizers in the provinces of China..Since land of crops for farming is scarce compared to the great population it demands from farming,it is very important to get as much out of the soil as possible with the best fertilizers..The Chinese are very health conscious and this small cap produces approximately 119 fertilizer products..The 2009 2nd quarter results,the company announced net income up 2.7 million from .7 million the fiscal year of 2008 for the same time period..Up 264.1%-the average weighted shares outstanding in the 2nd quarter in 2009 was a little more-18.4 million as opposed to 11.4 million in the 2nd quarter of 2008..Plenty of cash,teh company as of Dec 31,2008 has 15.1 million in cash or cash equivalents and 18.3 million in working capital..Stock holders equity is 23.5 million at the end of 2008 and they have short term loans of 3.8 million but no long term debt as of December 31,2008. For the first half of the 2009 fiscal year,capital expenditures was 1.9 million due to a purchase of new equipment at their new facility -a greenhouse R&D facility namely ‘Jintai’..They have increased their existing product lines by 50% to 15,000 metric tons recently in the 2nd quarter final results for 2009.They are expecting to increase a new, 40,000 metric ton facility which should come about in the first quarter of 2010..They expect to make good or exceed their expected revenues for the fiscal year of 31.6 and 32.8 million in revenue–their fiscal year ends on June 30,2009..They expect to meet or beat the expected diluted EPS of .61 and .66..In the conference call,the primary increase of revenue in the 2nd quarter over previous quarter’s was primarily due to the holiday season of agriculture products from ‘Jintai’-namely flower,vegetables and colored seedlings, & top -grade fruit accounting for 29.4 % of total revenue or 2.1 million..However,the 2010 increase projected of 40,000 metric tons and a peg of .14 should make it for a good speculation of 5% of ones money at this level of 3.61 a share..They even stated with the government strong support in the agriculture industry along with their new products ,they expect to be strong in the coming quarters..I recommend to do your own research but I would consider a buy of no more than 5% of your portfolio..CGA had been sold off viciously during last year’s tsunami thought mostly by one institution without any real reason for the huge downturn other than a slowing global economy, but China has a lot of cash ..And the government is spending it on many fronts including the agriculture community..Its is thinly traded–its 52 week high is 33.00-its low is 1.84 with a forward 12 month P/E 4.01 as of June 30,2010-the year they should increase the fertilizer unit by 40,000 metric tons over its current 50,000 metric tons..Again,its a thinly traded stock..Ticker CGA..

Rob and Mike currently owns no shares in CGA but might like to own shares in the near term future..This is an very thinly traded stock and a growth speculation stock..Please do your own independent research before you make an investment
purchase..See our disclaimer.

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