Stock InvestoMania

With the volatility in various markets, one thing is for certain: the world’s population continues to grow. That means more mouths to feed, and agricultural commodities should benefit from higher levels of demand over the next decade. With over 1.3 billion people, China requires much higher supply levels of agricultural commodities to meet increasing demands, which should open the door for higher corporate profits.

One way to increase corporate profits when prices for agricultural commodities continue to go up is through higher average crop yields. One of the more interesting stocks when it comes to agricultural commodities is Yongye International, Inc. (NASDAQ/YONG). This firm is one of a few in the agricultural commodities sector that develops and sells liquid and powder compounds used in addition to traditional fertilizers. The compounds consist of fulvic acid, mixed with further nutrients that help the development of plants. (Source: Yongye International, Inc. web site, accessed November 28, 2012)

Yongye is a Chinese-based firm, which has caused a lot of investors to shun the stock simply because of its location. While some Chinese-based companies have had questionable accounting standards, this doesn’t mean that all Chinese stocks are bad. This leaves the door open for opportunistic investors to accumulate cheaply valued companies with strong prospects for corporate profits growth. China has a large population with limited farmland. This means that increasing yield for all agricultural commodities is extremely important.
The company has a network of over 810 distributors, as well as 32,015 independently owned retailers covering in excess of 30 provinces in China. For the third quarter 2012, Yongye International reported financial results that were a bit complicated. The company initiated a new policy since the fourth quarter of 2011 in which it will only recognize revenue upon receipt of cash, not when shipments are actually made.

For the third quarter of 2012, Yongye increased shipments by 19.6% over the same quarter in 2011; however, revenue and corporate profits decreased, 7.7% and 5.9% respectively. Most of the revenue and corporate profits the company reported for the third quarter were actually from shipments made in the first quarter of 2012, which is a non-peak part of the year. The increase of 19.6% in third-quarter shipments will be recognized as corporate profits over the next couple of quarters as the payments come in from distributors. (Source: International, Inc. press release, “Yongye International Announces Third Quarter 2012 Financial Results,” November 9, 2012.)

The chairman and CEO of Yongye International, Zishen Wu, stated: “Despite the impact we continue to feel from the delayed revenue recognition for certain distributors, our business trends remain very strong. Shipments for the quarter were up almost 20%, and we continue to expand our reach while solidifying our brand by increasing the number of branded retailers with whom we partner. Additionally, during the quarter we completed our capacity expansion project at the Wuchuan Factory. We have now increased our manufacturing capacity by 52% to 70,000 tons, compared to the 46,000 ton-capacity that we had before this project was initiated.” (Source: Ibid.)

Some investors in agricultural commodities might be impatient and get out of the stock simply because they briefly glanced at the headline corporate profits numbers, and didn’t fully understand how this firm recognizes revenue. The firm clearly sees significant potential for growth in the agricultural commodities sector in China, as well as the subsequent rise in corporate profits. It certainly wouldn’t be expanding its manufacturing capacity by such a large amount if it didn’t believe that demand will be there in the future.
I had previously discussed Yongye’s stock when it was trading just over four dollars per share. At that time, I mentioned that the stock was cheap, and it remains still very reasonably priced. At a forward price-to-earnings ratio of just over two times, the stock still trades at a discount to book value of 0.67. The stock now has a clearly well-defined support line at $4.75. Most likely, Yongye will trade in a range-bound manner until we get closer to next couple of quarters’ financial results, which should show the improved level of shipments the firm has seen in the current quarter. A move above $5.75 would be quite bullish, indicating that there is a large amount of buyers who are anticipating a much higher share price and can’t accumulate enough shares at the current level.

While no one can predict the price of agricultural commodities, we are all aware of the growth in the world’s population. As citizens around the world continue to grow wealthier and the population expands, agricultural commodities should continue to do well.

Source: http://www.pennystockdetectives.com/

U.S.-listed Chinese stocks that are bouncing off their all-time lows are plentiful, and there is now a lot of value in this group. We know that China is experiencing a slowdown from its recent economic growth; this was engineered and encouraged by policymakers to contain a housing bubble. The combination of weaker business conditions and the virtual abandonment of Chinese stocks by institutional investors has created significant opportunities to try the buy low/sell high investment strategy. What’s clear is that it will take a while for China to recover from its current slowdown. It may be a little too early to take on new positions in Chinese stocks, but there are many worth following for the future.

One such Chinese stock that just bounced off its all-time low is China Ceramics Co., Ltd. (NASDAQ/CCCL). The company manufactures and sells ceramic tiles in China for exterior siding and flooring. Customers are in both residential and commercial markets. The company’s backlog of orders is in decline and it has already pre-announced weak expectations for the fourth quarter. But this is a stock worth keeping on your radar screen, because when China’s real estate market reaccelerates, so will business conditions for companies like China Ceramics. The company’s stock chart is featured below:
Of course, it goes without saying that Chinese stocks are super high-risk securities; they’ve proven this in recent history. But value is value, and I’d rather speculate in Chinese stocks that are down and out over any other type of strategy in this group.

Another small U.S.-listed Chinese stock that’s struggled on the stock market for the last two years is Lihua International, Inc. (NASDAQ/LIWA). While the company’s growth is slowing, its latest quarterly results were strong, and its share price is about equal with the amount of cash per share it has in the bank. Lihua’s stock chart is below:
As is always the case, timing is everything in the investment business. I suspect that it’s a little too early to consider new speculative positions among Chinese stocks. The group doesn’t have any momentum in this market. But I do think that if China’s economy can improve in 2013, then a lot of these stocks will turn around. There will be a time when value among Chinese stocks returns to growth, but we’re not quite there just yet.

Source: http://www.pennystockdetectives.com/

LONDON: Gold prices edged up on Thursday as well-received Chinese manufacturing data and hopes that a bailout deal for Greece may eventually be agreed boosted stocks and lifted the euro to three-week highs versus the dollar.

Prices held in a tight range, however, with trading activity expected to be light because of the US Thanksgiving holiday, which has closed Wall Street.

Spot gold was up 0.06 percent at $1,729.56 an ounce at 1205 GMT, while US gold was up 0.09 percent at $1,729.70.

The single currency broke higher and world stocks extended a week-long rally as manufacturing surveys in China and the United States boosted confidence over the growth outlook, while euro zone data was not as weak as some had feared.

A report showed China's manufacturing Purchasing Managers Index rose to a 13-month high of 50.4 in November, while euro zone data showing manufacturing activity slowed less than expected in November.

"Gold is 'risk on' - equities are higher and the dollar is a tad weaker. (But) the market needs a driver to break it above $1,740," Saxo Bank vice president Ole Hansen said.

He said the better than expected data from China could augur well for demand from the country, which has vied with India as the world's biggest gold consumer this year, but whose gold buying has proved fragile in the face of slowing growth.

"If there is a belief that China has turned the corner, there could be more physical demand," he said.

Gold prices have held a much closer correlation this year than last to assets seen as higher risk, like equities, the single currency and other commodities, as the dollar has taken over as investors' haven of choice.

Gold's 11 percent rise this year has come largely on the back of US monetary easing measures to boost its economy. It has been hovering around $1,730 this week as investors focus on whether the United States will avoid a fiscal crisis.

"The gold market is likely to trade sideways unless you get clear news from the US on the fiscal cliff," Nic Brown, analyst with Natixis, said, referring to $600 billion in tax hike and spending cuts that are due to roll in early next year.

Federal Reserve chairman Ben Bernanke on Wednesday repeated a warning that failing to avert a move towards the cliff could lead to recession, and said worries over how budget negotiations will be resolved were already damaging growth.

GOLD DEMAND

Investors said resilient Indian and Chinese gold demand underpinned prices.

Ross Norman, chief executive of precious metals trader Sharps Pixley, said Indian physical demand for gold had been better than expected this year, despite an increased gold import duty and a weak monsoon. A poor monsoon can erode farmers' earnings and gold purchases in the world's top consumer.

"There are some fresh longs coming into the market on the basis of physical demand in gold," he said.

Silver rose to $33.43 an ounce, its highest in more than a month, before easing back to $33.28, down 0.15 percent. Silver has risen more than 20 percent this year, leading precious metals.

Silver's ratio to gold, which measures the number of silver ounces needed to buy an ounce of gold, held near the six-week low it hit on Wednesday at 51.86 after silver outperformed.

"The ratio should head towards the less steep rising channel support at 50.90/60, or even all the way back to the low of last February at 48.50," Societe Generale said in a note.

Silver usually tracks moves in gold, but can also be influenced by riskier assets due to its industrial nature.

Holdings of the largest silver-backed exchange-traded fund, New York's iShares Silver Trust, dipped 0.15 percent on Tuesday.

ETFs issue securities backed by physical stocks of a precious metal, and have proved a popular way to invest in gold and silver in recent years.

Platinum edged up 0.48 percent to $1,581.25, while palladium was last at $651.75, up 1.6 percent.

Source: http://www.brecorder.com