Migao (MGO) @ $5.49 CND

I would rate Migao stock a buy at $5.49 a share. However, whoever thinks it will hit $20 is dreaming (You'll have to reevaluate at the next quarterly report before you can start guessing these numbers). Here's why:

The reason the stock price is so low is that the EPS has been volatile over the last two years. However, in the last year, it's been fairly strong and steady it seems. Plus, indications is that business is strong and growing.

However, the risk with the new plant they are building (and operation in this month) is that the new capacity they have built might not sell (however, that doesn't seem to be the case). Having said that, let's take a look at the numbers:

I've looked at their operating ratios and everything seems to be in order. MGO reported an EPS of 67c last year (with major growth over the last five quarters) and is trading at $5.49 or a PE of about 8.19. Using some fairly optimistic estimates, I'd guess a maximum EPS of 44c per quarter next year or 177c (assuming they continue to sell out their inventory at the same margins with the new capacity in their plant in Sichuan). At a generous EPS in the order of magnitude of 9, that indicates a price of $15.93. However, more realistically, in this economic environment, I'd say a more reasonable EPS target closer to a stable (but growing) 128c and a price target of 10 to 12 dollars.

But if it starts wandering to 10 to 12 dollars, I think you should start selling. That's a 100% growth target for a six month outlook.