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CCTR – Time to take a look?

We have an awesome chat room called Stock (SHO). I am constantly amazed by the quality of the people there and the smart picks that I find there.  The site is so big that it has “calved” different rooms based upon interest of the members (i.e. big board stocks, after hours, micro-micro stocks, and on specific stocks).  SHO has a room for the stock CCTR and that is the subject of this blog.

China Crescent Enterprises (CCTR) is a room favorite and has been very good to our members over the past months.  Now it seems to be taking a break after its most recent runup.  The MACD is still bullish, but the indicators (Stochastics and RSI) indicate that the stock might be overbought.

Here is the chart:

CCTR is in the low-margin business (but profitable) of being a reseller and systems integrator in the Chinese domestic market for Hewlett-Packard (HP), Sony (SNE), Lenovo (LNVGY.PK) and other brand name technology companies.  They are also engaged in software engineering, high quality software development and digital multimedia outsourcing services delivered to customers globally.  Headquartered in Dallas, the company has operations in Shanghai and Beijing, China.

The company took the audacious step to announcing in their upcoming earnings call Friday, August 21st that they will have over $1 million in net income for the second Q of their calendar year.  That announcement is on top of the fact that they have posted strong profits for the past two quarters.  I wonder if the stock will get any lift when the earnings announcement is made offiicial.  Is the news already built into the stock price?

The company has got a clean balance sheet….some debt, but great coverage and ratios.  They have issued a great deal of stock in 2009 and have over 110 million shares issued and outstanding.  But, if I was a betting man (and I am!), I think that CCTR has some runs in it.  It is a profitable, growing company in a tough IT environment, but they have shown the ability to grow revenues and profits in spite of it.

DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice. Neither nor its affiliates have a beneficial interest in the mentioned company; nor have they received compensation of any kind for any of the companies listed in this communication. The information contained in our report is not an offer to buy or sell securities. We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

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