To OTC Journal Members:
 

China's Top Tech Opportunity Finally Surfaces

Let's see.... an average earnings growth rate of 51% over the last four years? Check. Average annual revenue growth of 72% for the same time frame? Check. The support and endorsement from one of the largest companies in its respective market? Check. And last but not least, a current P/E ratio of under 4.0, with forecasts of 23% growth in income for 2011? Check.

It may sound like a dream, but believe me this is a real company, and all the above numbers are equally real.

Better still, this tech name posted some incredible news last night that I think is finally going to push investors off the sidelines and back into the stock. You can either participate in that event, or you can stand back and watch it from the sidelines. Where you are in that regard, however, doesn't change the fact that NIVS IntelliMedia Technology Group (AMEX:NIV) is undervalued right now, but isn't apt to stay undervalued for much longer.

Now, some people may have already heard the numbers and read enough to know they want in. For those folks, the ticker symbol is 'NIV', and thanks for stopping by.

Others may want to learn a little more before becoming an owner. If that's you, I encourage you to invest just a couple of minutes of time (which is free) before making a decision to invest in NIVS IntelliMedia Technology Group. I'll warn you now though, I think both groups are still going to come to the same bullish conclusion about owning NIV.
 

The One-Two Punch

Simply put, NIVS IntelliMedia Technology is one of China's fastest-growing and premiere consumer electronics manufacturers; it makes everything from TV's to TV boxes to stereos to mobile phones.

That's a pretty powerful one-two punch for investors, as you may know.

The 'one' is the sheer demand for technology. Consumer electronics sales faltered a little bit in the middle of the recession, but considering how nasty things got economically by 2008, electronic gizmos and gadgets continued to sell amazingly well. [More than 11 million iPhones sold that year despite the global lull, and total smartphone sales were up 13%]... a testament to the demand here.]Since then, personal electronics sales have gone hog-wild again.

The 'two' is the geography. China's middle class consumers are still coming into their own, and this group is expected to have disposable income of $3.8 trillion by 2025. This class of buyers is also the fastest growing set of consumers on the planet, and is expected to maintain that for quite some time.

That's a pretty compelling picture for investors as is, but there's en even bigger spark here that could really set the stock off. NIVS IntelliMedia Technology Group's technology is simply, for lack of a better way of describing it, cool.

Almost all of the company's products are considered to be 'intelligent' technology, meaning they anticipate, think, remembers, or know how to best work for its user. Many of these devices - and this is the really cool part - can be operated by voice commands using a centralized control set-top box.

And consumers love it. In fact, NIVS has been deemed China's 'Most Popular Brand' for three consecutive years within its audio/acoustic market.

You get the idea...NIVS is to the Chinese market kind of like what Apple is to American consumers (not that Apple products don't sell overseas, but the U.S. has Apple-product-fever, which bleeds over into the equity market).

NIVS IntelliMedia Technology Group actually has something investors want that Apple really doesn't offer though, and that's a well-diversified portfolio of products. Its mobile phone business represent about 30% of its revenue, while 33% of its sales come from audio and video equipment. The remainder is made of up a variety of electronics. That's good for investors, at it reduces volatility in income, and gives the company several paths toward profit growth.
 

By Buy the Numbers

I opened up with some of the key numbers here....average annual revenue growth of more than 70%, and average annual earnings growth of more than 50%. They are what they are, and there's no need to get on my soapbox about them.

I do, however, want to underscore that incredible growth rate with a chart that not only illustrates the growth here, but also shows how reliable that growth here has been.

The three key measures we call care about - sales, income, and per-share profit - are all nearby. The data prior to 2010 is all in set stone. 2010's numbers are ¾ 'for sure', as we only have reports for the first three quarters; the remainder has been filled in with Q4 estimates. 2011's numbers are obviously an estimate [these came from Rodman & Renshaw's Amit Dayal], but considering the five-year trend already in place, it's a very reasonable forecast.

Investors, there aren't too many companies that managed to breeze through the global recession as if it wasn't happening, and then continued to grow against the headwind. Just think of what this company could do when times are good again, as they are quickly becoming. In fact, you can already see the numbers starting to accelerate.

Oh, and you can step into NIV at a P/E ratio of only 3.4, and a forward-looking one of only 3.6. The market cap of $109 million is somehow only about 1/3 of 2011's expected sales of $362 million.

Bluntly speaking, this is one of those money-making opportunities other investors just aren't seeing for all the wrong reasons. You can capitalize on their mistake though, and take a position in a deeply undervalued stock with a stunning growth track record; the charts and numbers don't lie. You just have to act soon, since you know as well as I do the smart money isn't going to let NIV sit still when it's backed up by this kind of growth.
 

The Final Bullish Straw

If you're looking for the catalyst to get this great stock moving - the proverbial knock-out punch- you just got it.

Last night after the close, NIVS IntelliMedia Technology Group's announced preliminary results for sales of just one of its newest 3G phones in China. In the first month of its launch, the so-called 'E3' has generated over $4 million in sales. And let me be clear... this was a brand new product, and represents a great deal of added incremental revenue.

The E3 owes much of its success to one of the company's key partners - China Telecom (NYSE:CHA). It's one of the top three mobile service providers in the PRC, and it specifically focused on the E3 phone in a recent promotion [not unlike the way Verizon now markets the iPhone on Apple's behalf]. It's a huge accolade to be sure, but it gets even better for investors. NVIS is also negotiating product sales with China's other two major mobile names, so we could see this kind of sales success not just repeated in the near future, but multiplied.

The full press release is below.

One last point here.... I do think this news could get the stock going again, and as such, I have to say the announcement is a trade-worthy event in itself. You read the story though. While the news might get it going, the long-term underlying numbers are very likely to keep NIV going for quite some time; there aren't too many investors who would pass up a listed stock priced at a single-digit earnings multiple that's putting up this kind of growth.

Bottom line - I think NIV is a name you want to get into as soon as possible (today) and plan on holding for a while. It's a true fundamental growth story I expect to accelerate over time, and dish out the biggest rewards to its earliest owners. You just can't do it from the sidelines.

Press release: