Roughly three years ago, investors more or less decided to shun small, publicly traded companies operating out of Mainland China. The incidences of fraud and manipulation, as well as simple lack of exposure to the country, led many to believe that investing in such companies was akin to gambling --with the house having a decided advantage.
It seems like those times have passed, however, as a new set of small Chinese e-commerce players have enjoyed great years. E-commerce upstart and bookseller Dangdang (NYSE:DANG) has seen shares rise 80% since last July, while flash-sale specialist Vipshop (NYSE:VIPS) stands 550% higher over the same time frame.
That has led many to believe that other players in the space—particularly LightInTheBox (NYSE:LITB) -- have an equally lucrative future. But not all tiny Chinese e-commerce stocks are created equally. In the slideshow below, beginning investors can see three big reasons that they need to be cautious with LightInTheBox, and why comparisons to Vipshop and Dangdang are likely not warranted.
Brian Stoffel owns shares of Apple and E-Commerce China Dangdang. The Motley Fool recommends and owns shares of Apple. 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 has a disclosure policy.