Earnings Season Presents Opportunities in Chinese Companies

Robert Hsu, July 14, 2009

In this Issue:

Chinese Companies Set to Post Solid Earnings Results
Don't Miss a 13% Leap Higher!
Snatch Up A Quick 10% to 15% Gain
Positive Expectations for the Second Quarter
An Education Services Company Set to Report Positive Earnings

Chinese Companies Set to Post Solid Earnings Results

Second-quarter earnings season kicked off last Wednesday with aluminum giant Alcoa reporting a less-than-expected loss. Still, investors weren't impressed, and in the days that followed, volatility continued to reign in the market place.

Even after Goldman Sachs and Johnson & Johnson both reported better-than-expected earnings today, the U.S. stock markets continued to trade in the red. That's because most investors remain skeptical about second quarter, and the U.S.'s economic woes continue to weigh heavily on their minds.

A concern, in my opinion, that's well founded. First, consider this: The stock market rally died off in June with the S&P 500 gaining less than 0.1%. And secondly, the U.S. -- and most of the world -- is suffering from an economic downturn, as the most recent jobs report showed the U.S. economy is still shedding jobs.

So, Wall Street has set the bar low for second-quarter earnings. And I'm expecting earnings per share to drop since U.S. companies sold shares at a rapid pace during the quarter in order to raise money. But with low expectations, many companies will have the opportunity to produce surprising results, which could lead to a rally in the coming weeks.

While the potential for a rally over the next couple of weeks outweighs the possibility of a market breakdown, I still don't think that we should be focusing our attention on U.S. companies. That's because Chinese companies are more likely to post solid results from the most recent quarter, not just produce OK earnings that will easily surpass lowered expectations.

In fact, I'm expecting our Chinese recommendations, on average, to show year-over-year profit growth of more than 20%. And I wouldn't be surprised if a few Chinese companies even report as much as a 40% increase from a year ago.

That's because Chinese companies aren't being weighed down by a dismal economic outlook. Instead, the Chinese government's stimulus package and the resulting robust economic growth in China is helping these companies overcome the global financial crisis and economic downturn.

That equals incredible profits for investors who are tuned in and know exactly what companies are benefiting the most from China's strong economic growth. Not all Chinese companies will post blowout earnings. But there are a select few that have the potential to produce amazing results, and reward shareholders handsomely. Learn more now!.

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