$6 China Biotech Stock to Hit $10!

By Travis Johnson, Stock Gumshoe, January 26, 2009

This ad came in fast and hard over the weekend, behind the full marketing might of the folks at Investorplace in service of Asia Edge, Robert Hsu’s more expensive pan-Asia newsletter.

And it looks like they’re using some of the tested and (one assumes) successful marketing strategies that got Louis Navellier a lot of attention in this space last Summer (same publisher, naturally). As Navellier sent out ad after ad over the summer that promised huge returns in a matter of weeks for stocks like Gran Tierra Energy and Fuel Systems Solutions, so too Hsu is making bold short-term predictions today.

He’s found a Chinese healthcare stock that he thinks will go from the current six dollars up to ten bucks … the short term call is that Hsu says “I’m targeting 30% profit in the weeks ahead.”

And just to make sure you get your subscription in quickly, he tells us that the stock will be released over the weekend (so it’s out now, that means — the Gumshoe’s gotta sleep, after all) … and that …

“The Big Money Will Be Made in the Next 14 Days”

And of course, one of my favorite promises, also used often by Navellier: “you’ll thank me” — or, more specifically …

“Buy this one today and I guarantee you’ll thank me a thousand times by April 15th.”

So, whether or not we believe him that this stock is going to shoot forward in the weeks ahead, it can’t hurt to figure out what it is, right? At least, it can’t hurt if it’s free … which is probably why you’ve read this far. The Gumshoe has a grating habit of speaking in the third person, but he’s no dummy.

What’s the stock? Clues, please …

Or first, we should hear the big picture argument, right? Robert Hsu tells us that China’s $120 billion healthcare stimulus program is going to flood the market with profits …

“Our research indicates that the Chinese government’s $120 billion health care stimulus program will not only double the company’s earnings…

…but also hand you a quick 30% to 50% gain in the weeks ahead.”

He lays out a few reasons why this company in particular will benefit — including that they have leading anti-stroke and anti-cancer drugs which should be huge for the world’s largest cigarette market, that the “Westernization” of younger Chinese means they’ll be getting our “lifestyle” problems like obesity and diabetes, and that the growing health insurance business in China will help people get access to more medicines.

And we get a few specific clues that should help the Thinkolator focus in on the stock …

“… 37% sales growth, 24% earnings growth and a $150 million gross profit.”

“Our top stock in this sector … has the biggest distribution network in the generic branded sector”

“… last year, the company’s top money matter was its all-new anti stroke drug. However, when this one comes to the U.S., watch out as research clearly shows this new discovery will not only be one of the most effective anti stroke products on the market but also much less expensive than those of American competitors.”

“… the company’s lung cancer treatment is expected to capture the lion’s share of the $600+ million market by 2010—all thanks to the company’s low R&D costs.”

So we throw all that in the hopper of the mighty, mighty Thinkolator .. .and what comes out the other side? After a few seconds to centrifuge the sludge, I can tell you that this is …

Simcere Pharmaceutical Group (SCR)

To be honest, I had never heard of this company before today. They did indeed have 37% (37.10%, actually) sales growth and 24% (24.7%) earnings growth, and gross profit of near $150 million (understated a bit, it was actually almost $155 million).

The stock is just about $6 today — it opened at $6.45 this morning and is still near that price as I type, and might have gotten a little boost from Hsu to open with a small spike (though Asia Edge is quite expensive and doesn’t have a massive number of subscribers, so the impact might be muted). The shares have been public at this ticker in the US for about a year and a half, and took their big fall back in September when the financial world fell apart — before that they were trending slowly down, but still firmly in the low teens.

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