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Released on Thursday, November 3, 2011, 8:00 AM ET
Pittsburgh, PA (SpeculatingStocks) - Due to the European crisis, we have been looking for companies that are relatively un-impaired by the global debt crisis, this leads us to a very small sector of the global economy—Asia.
Well we went poking around and happened to find Cninsure Inc. (NASDAQ:CISG), an insurance services company which sells to clients in China. The company’s general business structure is the same as any other insurance services in America—increase the pool of policy’s and disperse incurred losses across that pool, the larger the pool the greater the gains against the losses—and what does China have more of than anything else: besides land of course? People! Insurable people at that, as China’s economic power continues to grow, so does the wealth of its citizenry, a wealth that must be insured against to make sure assets and debts are payable and that an estate is left behind to heirs.
However, this company is one to keep an eye on. Just recently a lawsuit regarding financial statements was filed against the company, and a short drop of the stock’s value occurred.
This decline has continued and the stock’s value now rests at a revolving range of between $6.82 and $7.46 per share. Cninsure denied any legitimacy in the claim by the litigators that financial statements had been falsified, but on the 24th of October, 2011, the company announced a ‘change in management’—leading many to believe the company’s previous management did screw up.
That being said, as the company is now under new management, although facing litigation charges, it could prove to be a worth-wild investment. Trading currently at $8.13 a share (4:00 PM EDT, November 2nd, 2011), the stock could potentially be way undervalued. In fact the company has a negative Enterprise Value! The enterprise value is equivalent to the market capitalization plus liabilities and minus cash assets—well Cninsure has a ton of cash--$7.74 per share to be exact. That’s right; the company has more cash per share than its current price.
Other aspects that boost this stock are its relatively high P/E ratio of 5.33 and a nice EPS of $1.76 per share. As far as the technicals are concerned the stock’s price looks like it might have recovered from its recent downtrend in candle-stick analysis. This is supported by an upwards momentum indicated by the MACD which has surpassed the EMA and continued to show a bullish divergence. In the very short run, however, the fast stochastic has indicated a downward movement in the company’s price—so it could move slightly lower although it seems to carry a support at $5.88 per share, and may travel up to a resistance of $10.55 a share before breaking through.
Anything could happen with this company, and always consider the litigations outcome as a contingency before purchasing any stock, but this one is a looker!
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