Fat Americans versus lean China
Today's Financial News - Posted October 15, 2009
Investors have a choice. Invest in China and its expanding economy or Krispy Kreme (NYSE:KKD) and America’s expanding waistline.
By Andrew Snyder, TodaysFinancialNews.com
Baltimore – (TFN): Investors don’t know what to do. A lackluster third-quarter earnings season is telling them to sell and run. Yet a “psychological” breakthrough yesterday has investors ready to sell the farm and go all in.
It is going to lead to trouble.
Even though the overall market is looking tipsy these days doesn’t mean there isn’t a whole host of investments worth making, especially overseas, where the notion of economic growth is alive and well.
There are three stocks making big moves today worth talking about. Two of the big gainers have China’s economic rebound to thank, while the third is about as American as you can get.
We’ll start on the domestic front.
Shares of Krispy Kreme Doughnuts (NYSE:KKD) are up by nearly 20% today thanks to a massive surge of volume. With no headline-making news out of the company, investors are wondering what’s up.
Expanding waistline, bloating share price
Back when I ran a volume-based trading service, today’s action would be a sure-fire sign to research the situation in much more detail. After just a bit of skimming, I haven’t found a thing.
No insider buying. No potential earnings leaks. Not a thing.
But it is important to remember this is a mere $315 million company. With just 67 million shares outstanding and an average of just 322,000 of the $4.50 shares trading each day, it does not take much to send prices significantly higher.
Keep off the bandwagon until things cool down a bit on this one. It won’t be long until today’s pop is all but erased.
The action at AutoChina International (NYSE:AUTC), a Chinese company dealing in, you guessed it, the automotive market, is much more intriguing.
The $150 million, thinly traded company has more fundamental attractiveness than a dozens shares of Krispy Kreme, even though the only headline surrounding today’s 50% move to the upside is an article from yesterday discussing the company’s 150th branch opening.
Investors want into this stock for one reason, exposure to China’s growing economy. As a quickly growing player in the country’s automotive industry AutoChina gives investors great access to a rich, expanding revenue stream.
Expect plenty more days in the green for this intriguing stock.
At least somebody watches baseball
Finally, Linktone (NASDAQ:LTON), a Chinese purveyor of mobile phone services, is handing its shareholders gains of over 30% as word spreads about the company’s new deal with China National Mobile Radio Media (CNMRA).
Linktone will provide Major League Baseball (MLB) highlights on CNMRA’s network, starting with the upcoming World Series.
While this would be a small-fry deal for many companies, for Linktone and its $116 million market cap, it shows the company’s growth and revenue potential from its exclusive deal with (MLB).
China is filled with opportunities like these. Almost every day there is a slew of double- and triple-digit movers coming from the region.
Today, you have two choices. Invest in China’s economic growth, or stick with Krispy Kreme and invest in America’s growing waistline.
Investors are doing themselves an incredible disservice not to have Chinese exposure within their portfolio.
Next Article: TFN eNews 10/15/2009: Top silver plays
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