Chinese Bottle Rockets

Part of our performance this year is due to a handful of Chinese Bottle Rocket stocks Rino International RINO being the most spectacular.  By no means would I suggest buying this stock now as it is being discovered by the momentum traders who can either propel it into the $20’s or pummel it next week upon the earnings release.   Our research uncovered the company before it became U.S. listed while trading under $7 or 3x current year earnings.

RINO is part of the newly emerging Green companies that provides environmental remediation in China.    The stock has tripled since our initial stake in the company but the PE/G remains at a very most .40.

Can this stock go higher, absolutely.    The growth rate could support a much higher valuation, but one must consider the risks associated with China thus a discounted PE (relative to the U.S.) to the 2010 estimate of $2.14 is in order.  The PE to tag the company with is open to debate 10x, 12x?  The mo-mo traders can push this to the mid $20’s easily upon a good eps release next week.   At that point, better to be a seller into strength.

Be careful out there.