Thursday, May 17, 2007
Payne's play on China's JOBS
“I consider myself one of the most bullish people on Wall Street, but I’ve been in awe of the way the market has acted,” notes
Charles Payne, editor of
Wall Street Commentaries.
Here, noted Fox TV business news regular explains why he still considers U.S. stocks to be “cheap” and highlights a recent recommendation – 51 Jobs (NASDAQ: JOBS), a Chinese recruitment firm.
“It wasn’t that the market soared in April that was so suprising, but how it fought off almost daily attempts to derail the rally. After struggling with the Federal Reserve and the interest rate guessing game that obviously weighed heavily on the market, stocks were able to react primarily to earnings results and corporate guidance.
“Not only was there a rebound in the amount of companies that beat the consensus earnings estimates, but also earnings have been substantially higher than what was expected.
“This refrain Sell in May and Go Away’ has become so ubiquitous that it’s ready to take the place of ‘buy low sell high’, so there will be a certain self-fulfilling angst that could take mundane sessions and turn them into big time losing ones.
“Meanwhile, the stock market is cheap. I can’t believe how many professionals march on television everyday to say stocks are overvalued, or have gone too far too fast. The market is playing catch up, and still has a long way to go.
“We should also note that billions of dollars in stocks have been bought back from publicly traded companies, meaning supply is shrinking fast. The fact of the matter is the American stock market has lagged the rest of the world even though large-cap U.S. companies are huge winners in the rise of the rest of the world’s economies.
“In addition, there is the stability factor along with the sustained earnings power and potential. Just imagine how the U.S. market is going to act once it is deemed a ‘hot’ one.
“Among our latest stock recommendation is 51 Jobs (NASDAQ: JOBS). The company is a China play that was once all the rage, but seems to have fallen off everyone’s radar.
“The company’s shares are changing hands at a price to tangible book ratio of just 3.72 versus 10.00 for the industry, and yet the company’s sales growth is outpacing its rivals. In addition, gross margin is 55.0% versus the industry average 44.0%.
“Technically, the stock breaks out through $18.00 (that may be when the fast money crowd moves back in), and then has a clear shot to $22.00. Our one year share price target is $28.”
posted at 11:47 AM
