Chinese companies do not get enough credit and investors have shied away from them. BORN is a company that has solid earnings with strong growth. The EPS ratio is well below market averages that puts this stock in a position for substantial gains if the ratio were to meet averages.
China New Borun Corporation (New Borun) (BORN) produces edible alcohol products. The company also produces crude corn oil and other alcohol by-products. The company has a market capitalization of $32 million, so is smallish. Their stock is traded at $1.27 per share.
The EPS ratio and the company’s earnings are what caught my eye. Here are the numbers over the past several years:
The earnings for 2016 are set to come in roughly about $0.92 per share. The EPS ratio is roughly 1.90 times earnings. That is low. Very low.
To be certain, the industry average is about 22.76 and the sector is even higher at 24.35. BORN is just priced well below the industry and the sector. What I also find compelling, earnings increasing as they are over the past several years, are the company’s assets as well as gross income, listed here over the past several years, respectively:
2012: $198,311 / $55
2013: $269,333 / $39
2014: $330,602 / $41
2015: $302,680 / $44
Likewise, there is a general trend upwards in the company’s numbers. The company has been returning healthy earnings and healthy revenue growth. But, the stock has remained largely forgotten. This is due to a few factors.
One of the biggest reasons other investors have not gotten into this stock is that the slowdown in China has kept investors away. But, there is something to keep in mind when you consider China and their economic slowdown: What they consider a slowdown is still very accelerated growth for the rest of the world. The Chinese economy’s growth rate dropped from double digits to a recent 6.5%. Again, their slowdown would be welcome in other parts of the world.
Still, this is enough to keep investors at bay from this stock. But, that should not deter you from putting this into your own portfolio. Price/Cash Flow is 0.90 whereas the rest of the industry is currently 20.81. Price/Sales is 0.11 versus 1.83. And finally, price to book is 0.12 versus 6.63.
Where should this stock be? Simple, if you compare this stock to its counterparts within the industry. If the stock were to rise to the levels of the rest of the sector BORN’s stock would be trading at $25.00 per share. That would push up the stock some 20-times. That is to get the company up to the industry average. Even if the company did not gain those levels, which realistically are high, then a realistic number would be around $18.00 per share, about 15-times EPS ratio, the stock market average over the past many decades.
These goals are realistic. And as investors start to scour around the world to find bargains, stocks like this one will shine as investors jump into the earnings releases. As more and more releases come in and are continually positive, then the company’s stock will continue to move higher. These gains will get significant, and, eventually, the 15-times earnings will be hit. That should be your target goal for owning this stock.
With the U.S. economy continuing to expand companies such as this will continue to grow. Again, China’s economy is growing at a mere 6.5% year-over-year rate. The United States is half of that but, is likely to reach a much fuller potential over the next few quarters. This will push companies like BORN to be more profitable as more revenue is available to the company.
You would want to put BORN into your portfolio as quickly as you can. The very next earning’s release could be the catalyst to push the stock up where it should be.
|This media report from Macroaxis distributed on February 14, 2017 was a factor to the next trading day price decrease.The overall trading delta against the next closing price was 0.79% . The overall trading delta when the story was published against the current closing price is 3.15% .|