Three Top Performing BRIC Stocks (CBPO, GSH, VIPS)
The cover story in this week's Barron's offers suggestions for a more sophisticated strategy for investing in emerging markets.
Gone are the days when all it took to make money was to buy the index or a fund that did not stray far from it.
Among the BRIC countries, the large emerging economies of Brazil, Russia, India and China, the recent top performing stocks of companies listed on U.S. exchanges come from China.
The three stocks featured here are all trading more than 70 percent higher than they were six months ago, as well as up more than 25 percent year to date.
China Biologic Products
This biopharmaceutical company has a focus on human plasma-based products and a market capitalization of about $680 million.
The price-to-earnings (P/E) ratio is less than those of American biotech companies such as Biogen Idec (NYSE: BIIB) and Gilead Sciences (NYSE: GILD). The Beijing-based company also has a long-term earnings per share (EPS) growth forecast of about 30 percent and a return on equity of almost 28 percent.
The number of shares sold short, as of the February 28 settlement date, represents well less than one percent of the total float. That is the second lowest level of short interest in China Biologic Products in at least a year.
The one analyst that follows the stock and was polled by Thomson/First Call recommends buying shares. But that analyst feels the stock has some head room as the price target represents about nine percent potential upside over the current share price. And that target would be a new multiyear high.
The share price is up about 73 percent year to date, despite pulling back briefly last week in the wake of the fourth-quarter earnings report. The stock has outperformed Biogen Idec and Gilead Sciences, as well as the broader markets, over the past six months.
This passenger and freight transportation services provider is headquartered in Shenzhen, and it sports a market cap near $3.5 billion and a dividend yield of about 2.7 percent.
Its P/E ratio is less than some other Chinese transportation companies. However, its long-term EPS growth forecast is less than eight percent and the return on equity is less than seven percent.
The short interest in Guangshen Railway was more than three percent of the float at the end of February. That was the lowest number of shares sold short in at least a year, but days to cover is about 30.
One analyst initiated the stock at Overweight back in January, but Thomson/First Call has no mean price target, or where the analysts expect the share price to go, listed.
The share price is up more than 29 percent year-to-date, though it has pulled back more than three percent in the past week from a new multiyear high. Over the past six months, the stock has outperformed the likes of Kansas City Southern (NYSE: KSU), as well as the broader markets.
Based in Guangzhou, this online discount retailer of various branded products has a market cap near $1.4 billion. The forward earnings multiple is greater than the industry average P/E ratio, but the long-term EPS growth forecast is about 55 percent.
The company priced a 7.2 million share public offering last week to fund capital expenditures and general corporate spending.
The short interest was a little more than one percent of the float at the end of February. But that was the highest number of shares sold short since last April, after two periods of rising short interest.
The consensus recommendation of the three analysts surveyed is to buy shares of Vipshop Holdings, and it has been for the past three months. But the share price has overrun their mean price target, which means the consensus is that there is no potential upside.
But the high price target is more than 10 percent higher than the current share price.
The share price is more than 72 percent higher year to date, but has faced resistance at $28 for the past three weeks.
Shares are trading almost 418 percent higher than a year ago. Over the past six months, the stock has outperformed E-China Commerce Dangdang (NYSE: DANG) and Overstock.com (NASDAQ: OSTK), as well as the broader markets.
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