Zhongpin Shares Plunged: 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 Chinese meat processor Zhongpin (Nasdaq: HOGS  ) are stinking up the place today, falling as much as 13.2% on modest trading volume.

So what: Zhongpin has no news to report today, nor are we hearing market-changing reports on the Chinese economy. Country Style Cooking (NYSE: CCSC  ) and other regional sector peers are holding steady today.

Now what: Chalk this one up to "just another movement," folks. Trading was very light until the shares fell far enough to be newsworthy for that very reason, and nothing has changed in the company, around it, or for business prospects ahead. Zhongpin is busy borrowing money to expand faster, which is a turn-on for some investors and a warning sign for others. With a PEG ratio just north of 0.5, there seems to be more risk than reward priced into the stock right now.

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. Motley Fool newsletter services have recommended buying shares of Country Style Cooking Restaurant Chain. Try any of our Foolish newsletter services free for 30 days. 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 (6) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 03, 2011, at 4:23 PM, unixfan wrote:

    You wrote: "With a PEG ratio just north of 0.5, there seems to be more risk than reward priced into the stock right now."

    WT?

    I would agree w/you if the PEG was north of 1.0. Please elaborate. The low PEG tells me the stock is undervalued at a PE of 5.7 and suffering from an expectation that earnings will lower. I mean really, earnings are only expected to grow by 3% or so? Please show me why my conclusion is flawed.

    It seems to me the stock is on sale.

  • Report this Comment On June 03, 2011, at 8:26 PM, bjasleep wrote:

    I wonder if these "articles" are generated automatically by software and thus resulting in these semantic errors.

  • Report this Comment On June 04, 2011, at 8:58 AM, BBRAF wrote:

    I agree with unixfan.The conclusion makes no sense.Why the price is falling so much remains a mystry to me.If somebody has any info it would be very usefull.

  • Report this Comment On June 04, 2011, at 9:23 AM, ryanalexanderson wrote:

    Hi guys -

    Yeah, I think that's just a turn of phrase - pretty sure the author agrees with you.

    He's saying "there's more 'risk' priced into the stock, than 'reward' priced into the stock". Indicating that the current price may be irrationally low.

    You're suggesting it says "there's more risk than reward at the current stock price."

    Understandable misinterpretation. Damn prepositions!

  • Report this Comment On June 04, 2011, at 9:26 AM, Dredu543 wrote:

    HOGS is a Strong Buy at this level.

  • Report this Comment On June 09, 2011, at 5:32 PM, Hqdepot2 wrote:

    I want to second BBRAF's request. Does anyone have any info on what's going on w/ HOGS? I was HEAVY into all the Chinese RTO's about 18 months ago and made money on them all believe it or not (I sold CCME, ZOOM and ZSTN just weeks before they all started to blow up) and I'm a little bit confused about HOGS, SORL and XIN, all of which I've just gotten back into now that they've come down so badly. I feel I know the stocks about as well as is possible and see no reason for any of them to be selling at these levels....so I started buying again last week. Let me know guys.

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