Zhongpin Shares Popped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of China-centric meat and food processor Zhongpin (Nasdaq: HOGS  ) are living up to their ticker today, gorging on its chart with a nearly 16% gain so far on heavy volume.

So what: After about a month of investor gloom, Zhongpin announced a strategic partnership with China Construction Bank. About $1.5 billion of fresh capital will help Zhongpin expand in coming years.

Now what: This is a tremendously popular watchlist stock and a respected ticker in our CAPS system. China's food products industry has had its share of tribulations over the last year, depressing Zhongpin's share price even though the company had little to do with the "clenbuterol pork scandal." If you bought shares after the follow-on stock offering last month, congratulations -- with a large financial facility at its side, further dilution looks unlikely.

Interested in more info on Zhongpin? Add it to your watchlist.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool is investors writing for investors.


Read/Post Comments (3) | Recommend This Article (1)

Comments from our Foolish Readers

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  • Report this Comment On April 15, 2011, at 2:03 PM, BBRAF wrote:

    I have been buying this stock for two years.I think that they are growing very fast and maybe too fast.I will continue to hold because i still believe that they are in a very sweet spot.We have to hope that they dont extend themselves too much.

  • Report this Comment On April 15, 2011, at 2:19 PM, kariku wrote:

    Kicking myself for buying YONG instead of HOGS.

  • Report this Comment On April 21, 2011, at 4:49 PM, jimydigriz wrote:

    much as i hate to badmouth zhongpin after making some nice coin off of trading their stock last year, i feel the time is not yet right to get back in. china is still reeling from last years flooding in henan province and the current drought in the north which has led to sharply higher food prices which in turn led to food price controls imposed by beijing. this cannot be good for any food retailer's bottom line. after they get in a few good harvests and price controls are eased off will be time enough but not now.

    as for buying yong rather than hogs, i have done the same thing and have no buyer's remorse whatsoever. as with zhongpin, yongye is a matter of proper timing and yongye's time is now. past history reveals that they make most of their annual income in the 2nd and 3rd quarters. not exactly a surprising result for a company that sells fertilizer to farmers during the growing season. this in conjunction with a greatly expanded distribution system and a pressing need for chinese farmers to increase production should guarantee handsome revenues. further, it seems clear to me that the stock price has been artificially depressed in an already nervous market due to the controversy over the recent pejorative articles by mr. bezek, articles which in my opinion are without foundation. some will also say of course that the recent runup in yongye is simply short covering however, once the earnings reports start rolling in none of this foolishness will matter.

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