To OTC Journal Members: 
 

China Energy Recycling (CREG): Take A Profit

If you're smart and lucky enough to identify undervalued stocks, when they become fully valued, you have to be willing to take some or all of your profits.

Today, the news on China Energy Recycling, my #1 pick, is about as good as it gets. The company has announced it has been granted an uplisting from the OTC Bulletin Board to the NASDAQ. This not only elevates the stock's stature, it also multiplies the size of the audience many times over. Institutional investors previously excluded from being able to trade in this stock are now able to pile in. From this point on, I would expect a major improvement in both price and liquidity.

I've looked at a number of recent uplistings. Whether the company made the move to the NASDAQ or AMEX, the result was the same in every case. The stock traded the highest volume in its history at a new all time high.

I own about 64,000 shares, accumulated at levels ranging from $1.31 to $4. 

If CREG goes nuts today and/or on Monday when the stock will actually begin trading on NASDAQ, I intend to sell close to 1/3 of my position. When I first introduced this company at $2.40 on October 19th, I suggested you were able to accumulate at about 10x 2009 EPS. As it turned out, with CREG delivering $.25 in EPS, it was about 9.6x '09 EPS.

The stock closed at $5.25 yesterday. If we're lucky enough to see it trade into the $7 range, it will be trading at more like 30x trailing EPS. This is why we invest in these stocks. To enjoy a profit like this.

I'm not saying the stock won't end up at $10 or $20. It might very well end up much higher than the $7 to $8. That's why I only plan to sell about 1/3 of the position. If I trade it near the high, and it comes back down, I might even buy it back. 

When stocks surge and everyone wants them, that's when you sell. When stocks are quiet and no one is paying attention, that's when you buy.

I have no idea where this stock might be trading by the time you read today's edition. Hopefully, my thesis proves out. 

If you followed my lead and participated in CREG, enjoy this day. Good days like this don't come along that often.

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