Tag - TTM

You've probably heard the quote from the great entrepreneur Henry Ford who once commented, "People can have the model-T in any color, so long as it's black".

The man's unique ability to combine innovation with simplicity is symbolic of the great entrepreneurial spirit that helped America become the world's leading superpower. Unfortunately, in modern America, the U.S. automobile industry has faltered and once great companies like Ford (NYSE:F) and General Motors have fallen from grace.

Ford also once said, "Nothing is particularly hard if you divide it into small jobs." That's the mentality that is needed right now for U.S. auto companies and parts suppliers if they are going to succeed in the 21^st century.

When the U.S. stock market is flashing mixed messages, like it has been lately, I return my attention to looking for good entry prices. Unless something has changed my fundamental view of the market, these dips are the time to buy more of the companies I like, for less. Remember, buy cheap, sell dear. 

That's what I've been doing in my SmallCapInvestor PRO portfolio. So far this year, nine of eleven positions have been closed with a gain, one greater then 140%.

In small-caps, the drop is typically greater than in large-caps, and the recent market action has born this out once again. Last week the Russell shed 2.7% while the S&P 500 only lost 0.7%. But the reverse is also true, and history has shown that small-caps consistently outperform large caps on the upside. Investors who purchased the Russell 2000 small-cap index ten years ago would have enjoyed returns around 40%, versus a 20% loss for investors in the S%P 500.

I often look to overseas markets like China and India in search of attractive small-cap investments. And why not? For its part, China just reported 8.9% Thrid Quarter growth while the U.S. has stalled. India is growing GDP growth at around 6%. 

This morning, many Asian indices were trading higher after South Korea reported excellent quarterly GDP growth. We also heard encouraging news from India's Tata Motors (NYSE:TTM). The nation's largest auto maker doubled profits on increasing sales, and the stock is responding with a 6% gain. 

"Asia is booming again, and one industry that is growing like wildfire is 'green' tech in China," says Mark Skousen. In The Turnaround Alert, he eyes China Green Agriculture (AMEX:CGA)."

"One way to profit is to buy China Green Agriculture, one of the fastest-growing agricultural technology companies in China.

"Through its subsidiary Shaanxi TechTeam Jinong Humic Acid Product Co. Ltd., it produces and distributes 119 different organic fertilizer products throughout 27 provinces in China.

"Revenues doubled last year to $32 million, and earnings exploded 132% to $11.4 million. With a profit margin exceeding 35%, China Green is red hot, and is likely to continue growing rapidly.

"It doesn’t hurt that the CEO Tao Li is a high government official, serving as vice chairman of the China Green Food Association of the Ministry of Agriculture.

"The small cap stock traded as high as $33 a share when it first came out, and is now more reasonably priced.

"Still, it’s selling for only eight times next year’s earnings, and has a price-earnings to growth (PEG) ratio of only 0.31  (the lower a PEG number, the better)."
 

The transport of people, materials and goods are crucial to China's monumental infrastructure build-out and its continued economic development. The nation's growth is pushing demand ever higher for passenger bus and commercial truck fleets, which is evidenced by a surge in truck and bus sales in China. In 2007, light truck sales rose 16%, heavy-duty truck sales soared $60% and bus sales were up some 20%.

As the demand for commercial vehicles continues to grow, the fortunes of Sorl Auto Parts, Inc. (Nasdaq: SORL), China’s largest manufacturer of commercial vehicle air brake systems, stand to follow. SORL manufactures, markets and distributes a comprehensive line of over 40 categories of air brake valves and components for commercial vehicles weighing over three tons, such as hand and foot brake valves, spring brake chambers, exhaust relay valves, air dryers and clutch servos (pressure boosters).

Since commercial vehicles' added weight means they take up to 40% farther than cars to stop, top-notch, braking systems are essential for truck and bus safety. With a strong reputation for using state-of-the-art technology to develop and build the highest quality and most advanced air brake systems in China, SORL is routinely awarded the "Top Supplier" designation for air brake systems by its major customers.

The only company in China that specializes in air brake valve systems exclusively, SORL has superior brand recognition and an extensive national distribution network that gives it a decisive advantage over its competitors, allowing the company to control the lion's share of a highly fragmented domestic market.

SORL has acquired vast experience in its specialty niche and forged solid relationships with China's 29 major automotive original equipment manufacturers (OEM), including Beiqi Foton, China's largest light truck manufacturer. The company also has a strong brand presence in the auto parts aftermarket, with exclusive contracts with close to 30 authorized distributors who only sell SORL-branded parts through over 800 sub-distributors nationwide.