It’s a requirement, it seems, for the various editors at Investorplace, including Robert Hsu and Louis Navellier, to market their newsletters using this “$X stock to hit $2X with or without you” teaser. Either that, or it really works to haul in subscribers by the bucketload.
Either way, I always like to take a quick look at these to see if there’s anything to it — is the promise of a double in the stock just a marketing ploy?
Well, that’s probably always a safe assumption — but let’s have a look anyway, shall we? There are two of these teasers floating around right now, one for a $75 stock to hit $150, and one for a $7 stock to hit $14 — we’ll identify both, but focus more on the little guy.
“$7 China Stock to Hit $14 With or Without You
“‘All thanks to China’s $200 billion education spending boom.
“‘Buy this one today and I guarantee you’ll thank me a thousand times by this time next year.”
If you’ve been smashing rocks here in the Gumshoe quarry for a while, that last bit might also sound familiar — Hsu and Navellier have both used this term many times in their ads, including some older ones here and here. Hsu’s “promises” to this effect that I’ve seen have lately had a bit more success than Navellier’s, but that may be due to the strong bounceback in China as much as anything else — and really, it’s worth remembering that it’s almost certainly neither Hsu or Navellier writing these promises, it’s probably the same copywriter just reusing his work. Or hers, of course.
But you want the name of our little Chinese education company, no?
Hsu provides a background rationale for investing in for-profit Chinese education — but we’ve also seen this rationale dozens of times as he and other pundits have argued for the sector over the past couple years and touted one or more of the half-dozen relevant firms. So we’ll just stipulate that, yes, the Chinese are very education-focused, short on schools, spending money like crazy on education, sending thousands of students abroad for education, and building an urbanized and educated society that requires far more higher education than 20 years ago.
So yes, it’s a big business — let’s check the clues to find Hsu’s favorite stock:
“When you consider our top company is one of China’s leading private education companies, with over 131,000 students at 15 colleges and 6,500 secondary schools—and is about to boost enrollment by another 5,000 students—you can see why I’m so excited about this company and why I’m recommending you add this one to your holdings immediately.”
Hmmm, talk about deja vu. This whole paragraph was actually lifted from a prior Robert Hsu teaser from last May. Let’s check the other details to be sure:
“If you can own this one before it declares, you could easily grab 30%—50% gains in the next 90 days.
“Its e-learning business is growing rapidly at an astounding 25% a year, and as more Chinese enroll in college classes, this number is set to increase.
“Its Foreign Trade and Business College (FTBC) is on track to boost enrollment a whopping 73%.
“What’s more, its state-of the art, satellite online learning center is on track to increase its coverage exponentially, as more students flock to its respected distance learning programs that are beamed into villages and farms around the country.
“And that’s just the beginning.
“A quick look at the financials, and you’ll quickly see why my hands itch in anticipation of the profits headed our way.
“Management owns 41% of the stock, which has a market cap of nearly $3oo million.
“The company is currently sitting on $2.10 in cash per share, with no debt.
“The company earned a pro-forma net income, excluding a one-time charge, of 35 cents a share in 2008.Are you getting our free Daily Update
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“The company expects an EPS of 42 cents in 2009 when those numbers are finally reported.