To OTC Journal Members: 
 

When  is eNuF eNuF

Yes, the sound you hear is me tearing my hair out. Why can't you hear anything? First of all, you are reading this, so there's no sound. Secondly, even if you were sitting in my office, you wouldn't hear me tearing my hair out as I have no hair left- one of the benefits of advancing years, bald grandfathers on both sides, and being involved in highly volatile small cap stocks. No hair dryer to lug on the road, and cheap haircuts.

Onwards- when I say eNuF is eNuF, I'm referencing the NF Energy (OTC BB: NFEC) numbers which came out pre open today, and showed the company was completely back on track and warranted a considerably higher valuation. When is eNuF going to be eNuf on these stocks that are delivering in a big way? I'm not sure, but I suspect they will all go nuts before the end of the year.

And, there's another absolutely mind boggling valuation out there today- Biostar Pharma (NASDAQ: BSPM) came out with their Q2 numbers, and I'm drooling at the proposition of where both of these stocks will be in a year- strike that- 6 months.

Starting with NF Energy- one of my favorite undiscovered gems- I love the company, love the sector, and love the upside. I'm not crazy about the lack of liquidity and the price on the screen today, but with their balance sheet and profit margins it's sure easy to hold for the long term, which I'm committed to doing for my own investment.

Diving right in- NF had a top line of $7.2 million for the quarter- up 38% over the quarter last year, and a whopping 188% over Q1 of '10- Q1 was a moderately disappointing quarter, but right back on track for Q2.

NF dished $1.5 million in net income for the quarter- which translates to $.10 in EPS. Likely, NF will come in with over $.50 in EPS for the year, and of course with 38% yty growth, $5.00 becomes a reasonable upside target for the stock in any reasonable market environment. Simply a possible double from here.

More importantly, their sector is likely to become sizzling hot in the next China bull run. Their "Energy Management" business has huge upside potential- while not prevalent in the US where we have such cheap energy, the use of an "Energy Management" company in China is becoming all the rage- why? Tax Incentives. The Chinese government has installed aggressive tax incentives for companies managing their energy use efficiently, and the tax savings more than pay for the services. It's a good investment.

I suspect this one will rocket in the next China surge, especially in light of there now only being 13.3 million shares I&O fully diluted- very few shares for investors to fight over when the buyers come.

Biostar Pharma (NASDAQ: BSPM) is also more than getting the job done, and this company is another with massive upside potential trading at an absurd valuation (how many times can I say that?).

BSPM is holding their earnings conference call tomorrow morning, but let the cat out of the bag early by filing their 10Q quarterly numbers. 

I love the upside in their OTC treatment for HepB- a disease effecting 10% of China's population. They haven't even begun to tap the market, and yet they delivered $20 million in revs (up 46% over last year, and 60% over last quarter).

Net income came in at $5.56 million, which is $.20 in fully diluted EPS. It would appear the CEO's pledge to deliver $80 million in revs and $18 million in profits is very believable, and suggests the stock is worth at least $8 per share today- sees like an absolute steal at $2.75.

The biotech/pharma sector for China based companies is ready to rock this year, and when it does all of these stocks will have 30% bumps before you even know it. 

There's your update for today. More tomorrow with CREG and BEAC - the last two for this earnings season. Look for an overview of all of this later in the week.

Disclosure: Long NFEC and BSPM

Home Page : www.otcjournal.com
Email Questions or Comments To: editor@otcjournal.com