China Finance Online (JRJC – Nasdaq)
Dear Bottarelli Research Member,
The markets have continued their wild up and down swings this week, but I think a lot of the recent turbulence is now due to tax-loss selling. As this tax-loss selling comes to an end, I believe we’re going to see some rather significant upside action in January and February — especially as new money starts moving back into the markets. So make sure you have some powder for our 2008 picks, because we could see some really nice gains early in the year. But first, we have one final small-cap pick to close out the 2007 investing year.
Over the last few weeks, I’ve had many requests for another small-cap pick that moves like JA Solar Holdings (JASO – NASDAQ). As you know, JASO has been one of our top small-cap performers in 2007, and we just closed out our JASO position for a maximum gain of 206.12%. As you can see from the chart below, JASO remains remarkably strong — exhibited by another new 52-week high in today’s action.
For today’s alert, I’d like to get you back into another stock with enormous upside ability. But let me tell you straight up, the company I’m about to recommend moves faster than a greased hog in a rain storm. They’re positioned in a very hot segment of the market — one which we don’t currently have any exposure to in our small-cap portfolio. And since this stock has just pulled way off its highs, the time to buy is now.
The company is involved in the media business in China — specifically subscription-based Web sites that provide financial information, databases, and analytical information to individual investors and investment firms. I mentioned to Bryan a few weeks back that this company could be the up-and-coming "Goldman Sachs of China.” And we all know how well Goldman Sachs has performed over the last few years.
In last week’s alert, I mentioned that the average person in China saves 20-30% of their take-home income, and what do you think they do with this money? For one, they use to it buy real estate. And they also use it to invest. As you know, last week’s small-cap pick on EJ capitalized on the real estate side of this powerful savings trend — and this week’s pick will capitalize on the investment side.
The company is called China Finance Online (JRJC – NASDAQ) and I’ve been watching it very closely for many weeks. The stock has pulled way back, and now I feel that a buy under $22.00 is in order. I’ll turn things over to Bryan in just a moment, but be prepared to buckle your seatbelts on this one because it moves quite fast. Let’s go ahead and enter a small position (something that I call “nibbling”). We can always add more shares at a later date. As a general guideline, buy half of the position that you normally would.
UPDATES
Skins (SKNN.OB): I’ve had some questions about this one lately, so let me reiterate that this is a new footwear idea that’s still in its infancy stages of growth. Their footwear concept is certainly gaining acceptance, but the stock has gotten beaten up pretty hard lately. Since this was a speculative pick, let’s see how their Christmas sales come in. Hold.
Echelon Corporation (ELON – NASDAQ): There’s really no rhyme or reason for the recent sell off. They are involved in one of the brightest sweet spots on the market today — energy conservation — and going into 2008 I continue to feel like this will be a hot-button topic for investors. This certainly supports holding ELON shares. In fact, it looks to me like tax-induced selling has opened up a wonderful opportunity for anyone who does not own ELON to buy at these levels. Also, for anyone that trades options, this looks like a great 6-month call play. Hold.
Basin Water (BWTR – NASDAQ): We’ve stuck with this one through the good and the bad, and as I’ve mentioned before, BWTR is now a turnaround play that (I think) will end up surprising many people. Their deal with Rohm and Haas is going to be a huge benefit for BWTR going forward, so let’s sit tight on this play and give it some room to shake off the doom and gloom. Hold.
U.S. Geothermal (UGTH.OB): We have already taken some great gains off the table on this gem, but now that they’re about to produce power in Idaho, I think we’re getting a second chance to make some strong returns. In fact, I think we could tack on another 100% from profits we’ve already taken, so let’s buy this dip.
Terra Nostra Resources (TNRO.OB): They recently announced plans to spin off their copper venture in a new IPO with Sino Strategic Metals — and they’re now awaiting the blessing from the Hong Kong Exchange. As TNRO shareholders, we could end up getting some of this IPO given to us in shares (or a special dividend) so let’s wait and see what transpires. I must say, TNRO has really held up well after some short sellers attempted to push the shares lower, so stay tuned for a promising 2008. Hold.
Before I go, I want to wish you a joyful holiday and an exciting new year. This will be our last small-cap alert for 2007, but I can tell you that Bryan and I have a lot of exciting small-cap research in store for you in 2008. So rest up and get ready for some powerful trading ideas! Have an enjoyable holiday, and be sure to take a moment and give thanks for the abundance in your life.
Enjoy the Holidays — and we’ll see you in 2008!
Sincerely,
P.S. If you have yet to take advantage of our Special Year End renewal offer, be sure to lock in this great deal now. This offer expires next Monday, so don’t miss the details on this special offer in Bryan’s section below!
“The Goldman Sachs of China”
Like Mark said above, China Finance Online (JRJC — NASDAQ) is our newest version of JA Solar Holdings (JASO – NASDAQ). And by that, we mean that JRJC has high price multiples, eye-popping growth figures, massive price swings, and plenty of skeptics.
Now let me tell you: This was exactly the situation I saw while preparing the JASO alert, and we all know how well that ended for us. So let’s emulate that success by taking a small position in JRJC today.
Starting from the top, China Finance Online sells online services that focus on analyzing financial information in the People’s Republic of China. They offer subscription-based services on financial analytical tools that allow users to calculate current and historical financial data for stocks, bonds, and mutual funds. They offer these services to individual investors, institutional investors, high-net worth individuals, investment bankers, stock analysts, financial reporters, and middle class individuals. They also offer categorized services for news, research reports, online forums and bulletin boards.
If you use any real-time price and information services for your stock investing (like eSignal, Trade Station, etc.) then you can think of JRJC as China’s premier version of these services. But that’s just the tip of the iceberg, as you’ll see. That’s why Mark thinks that JRJC could be the Goldman Sachs of China. And from an investment standpoint, the benefits of JRJC are unmistakable:
- They have $65 million in cash and zero debt.
- Similar to our E-House recommendation from last week, JRJC has no direct competition for financial services in China. That means when a billion Chinese (who are ravenous investors) come looking for financial information, they’ll all end up at the same place: JRJC.
- And their Q3 earnings were absolutely blockbuster. During Q3 2007, China Finance Online reported net revenues of $7.30 million, compared to $1.73 million for the same period in 2006. Also, gross profit came in at $6.11 million, compared to $1.41 million for the same period in 2006. That’s respective increases of 321% and 333%. Amazing!
It’s easy to see why JRJC’s Q3 revenues were so strong. As of September 30th, JRJC had 8.1 million registered user accounts from jrj.com and stockstar.com. Since they had 7.3 million accounts in the previous quarter, that’s an increase of 800,000 from one quarter to the next. Of that total membership pool, their fee-based subscribers grew to 45,500 (as compared to 37,400 in the previous quarter). That’s an increase of 22%.
Now, the thinking here is that as the Chinese markets continue to attract attention, JRJC will grow its financial services operation at an exponential rate. And even if the Chinese stock market buddle bursts, investors still need to receive financial information. So in a way, JRJC is immune to any violent Chinese market sell-off!
Looking at their full business operation, China Finance Online offers nine different service packages, each fulfilling specific needs of certain investors. Here’ a quick breakdown of the paid services that JRJC offers:
Tao of Wealth: This is JRJC’snewest proprietary financial service package, which combines personal finance tools such as book-keeping, financial reporting, and real time financial news and personal wealth management. This service is aimed at helping Chinese individuals and families record and analyze their income, expenses, assets and investments.
Stock Finder: This package is designed for Chinese investors who favor technical analysis tools as the primary method to select stocks.
Stock Radar: This package is a Web-based, simplified version of Stock Finder that applies more simplistic analytical tools.
Sidekick X: This package is designed for subscribers who do not necessarily have stock investment needs but want to receive up-to-date and comprehensive news and information relating to specific topics or listed companies.
Storm: This package is designed for Chinese investors who demand up-to-date and comprehensive news and information relating to specific topics and listed companies. (Storm contains fundamental analysis tools but not technical analysis tools.)
Quick Winner: This package is designed for subscribers who prefer to examine top performers by industry. Quick Winner identifies top performing stocks (by industry) and allows subscribers to track the top traders of these investments.
Analyst Scoreboard: This package is designed for subscribers who desire to research or track the performance of specific securities firms. It provides weekly, monthly and annual performance rankings of securities firms based on the profits or losses of the trades they recommend.
Arbitrager: This package is designed for subscribers who want to review the investment returns selected by the top traders of the daily best stock market performers. Arbitrager uses statistical analysis tools to identify top performing stocks on a daily basis, and allows subscribers to identify the top traders of these investments.
The Grand Reference V: This package is the most comprehensive service package that JRJC offers — both in terms of content and functionality. It includes all of their current research and analytical tools listed above.
As I mentioned, these nine financial service packages have allowed JRJC to report remarkable 321% growth in year over year Q3 results. And in terms of 2008 revenue guidance, JRJC just raised their projected net revenues for 2008. They now expect net revenues between $50 million and $60 million compared to the previous guidance of $45 million to $51 million.
Make no mistake, these are amazing numbers — and Wall Street certainly rewards explosive growth like this. In fact, as you can see from the chart below, JRJC is up 378.97% over the last 52-weeks, but the skeptics now think the shares are over-bought and due for a pullback.
My response to any of these skeptics is that the pullback has already occurred. After all, the stock has just moved from $45.00 down to current levels around $20.00. Now that JRJC is finding support at these current levels, it could be setting up for the second upside push. That’s why we’d like to establish a small position now.
Plus, JRJC is only covered by three analysts (JP Morgan, Jefferies & Company, and Brean Murray Carret), and of these three analysts I recognize only one. Therefore, JRJC could still attract a lot of investor attention, especially from the institutional side, and that could really push shares higher once again. So as our last play of 2007, let’s go ahead and add a small position in JRJC to our small-cap ledger now!
PLAY: Buy shares of China Finance Online (JRJC – NASDAQ) at or under $22.00, good for the week.
And as one final piece of business in 2007, be sure not to miss out our best offer of the year!
SPECIAL OFFER REMINDER: THIS IS YOUR LAST CHANCE!
Time is quickly running out on our opportunity to lock in 9 more months of Bottarelli Research Small Cap service for the lowest prices of the year.
If you recall, I’m offering you a limited time opportunity to lock in 9 more months of service for the discounted price of $1,000. Since the current 6-month rate is $950, that’s like getting three additional months of service, FREE OF CHARGE.This offer is only good until Monday, December 24th, so if you’re interested you must act now!
Best of all, if you lock in this special offer today, your 9-month extension will be applied to the end of your current membership term. That means you don’t lose any time by locking this special rate today. For example, if your small-cap term is set to expire in February of 2008, taking this special offer right now will add 9 more months of service onto your February expiration date.
So, if you enjoy being a Bottarelli Research Small Cap member, and you intend to be part of our elite trading group next year, then it behooves you to lock in this special membership extension now!
REMEMBER: This special discount is only available until December 24th. That’s next Monday! So give yourself an early holiday present and lock in 9 more months of service right now.
To take this special offer, simply follow the discounted membership link below and select the 9-month term titled "End of Year Special."
https://www.bottarelliresearch.com/renew/?service=smcap&offer=WKIM2R67ES
And above all, I thank you for a wonderful 2007, and I’m looking forward to an even better 2008!
Have a great holiday season, and I look forward to many more small-cap winners in 2008.
All the best!
Sincerely,
© 2012 CSR Group, LLC. All rights reserved. Published in USA.
Information, opinion, research, and commentary contained herein is obtained from sources believed to be reliable; their reliability, however, cannot be guaranteed. The maxim of Caveat Emptor applies — let the buyer beware. Bottarelli Research does not provide individual investment advice, act as an investment advisor, or individually advocate the purchase or sale of any security or investment.
Investments recommended in this service should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Bottarelli Research reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscriber’s initials will be used unless express written permission has been granted to the contrary.
CSR Group, LLC expressly forbids its writers from having a financial interest in any security recommended to readers. Furthermore, all employees and agents of CSR Group, LLC and its affiliate companies must wait 24 hours before following a published recommendation.
Bottarelli Research alerts contain time-sensitive information, and are published and distributed to members with urgency. Because of this, not all published materials can be adequately proofread, and an occasional spelling or grammar error may exist.
