Low-Priced China Metals Play Could Head Higher

07/15/2010 12:01 am EST

Focus: STOCKS

Scott Redler

Chief Strategic Officer, T3 Trading Group

China Armco Metals, Inc. (CNAM), through its subsidiaries, imports, sells, and distributes various metal ore and non-ferrous metals to the metal refinery industry in China.

The stock has been hit hard over the past six months. This past Monday, the company did a presentation for analysts. This could be a combination value play and technical play to put in your portfolio for next two quarters.


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The company should do 200-225 this year, earn 80-83 cents, and it has a P/E of 3.9 with a market cap of $45 million. In time, it can have a big run. I bought some, and to me as a technical trader, I think a move above $3.30-$3.40 will ignite this stock for a move back to $4 quickly, then perhaps $6 or so. Nice risk/reward in this lower range.

When these stocks go, they are hard to grab, so you have to be involved with some beforehand. Buy at $3.30-$3.40. Stop would be $2.75. First target $4.20. Second target $6.

By Scott Redler, trader, T3Live.com

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