Based on the aggregated intelligence of 135,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, Chinese biodiesel fuel producer Gushan Environmental Energy (NYSE: GU ) has earned a coveted five-star ranking.
With that in mind, let's take a closer look at Gushan's business and see what CAPS investors are saying about the stock right now.
Gushan facts
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Headquarters (founded)
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Fuzhou City, China (2001)
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Market Cap
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$169.3 million
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Industry
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Specialty Chemicals
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TTM Revenue
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$210.1 million
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Management
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Founder/CEO Jianqiu Yu (since 2001)
CFO Ngai Chi Chan (since 2007)
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TTM Return on Capital
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8.3%
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Cash/Debt
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$122.6 million/$0
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Dividend Yield
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2.3%
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Competitors
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PetroChina (NYSE: PTR )
China Petroleum & Chemical (NYSE: SNP )
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CAPS Members Bullish on GU Also Bullish on:
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Chesapeake Energy (NYSE: CHK )
Vale (NYSE: VALE )
General Electric (NYSE: GE )
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CAPS Members Bearish on GU Also Bearish on:
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Ford Motor (NYSE: F )
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Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS. TTM = trailing 12 months.
Over on CAPS, some 97% of the 806 members who have rated Gushan believe the stock will outperform the S&P 500 going forward. These bulls include noblepaladin and All-Star mrindependent, who is ranked in the top 4% of our community.
Late last month, noblepaladin tapped Gushan's current tax dispute as a compelling catalyst:
Large cash/share. Current quarter should be much better than last quarter since oil is up from its lows. There is a tax problem that is keeping the company down for now (whether biofuel should be taxed like normal fuel), but I believe it will be resolved in the favor of [Gushan]. Even if it is not in the favor of [Gushan], valuation alone should give [Gushan] limited downside as it is trading around liquidation value.
In a pitch from two weeks earlier, mrindependent shares that sentiment on the special situation:
The balance sheet is rock solid ... The company is waiting on a ruling as to whether the Chinese consumption tax applies to the product of one of its plants. If I were a Chinese official, I certainly would support alternative energy - considering commodities inflation is the leading threat to China's longterm growth prospects. Accordingly, I suspect that this company is in favor with the Chinese government. Last, but not least, I suspect this company's fortunes will wax and want with: (1) the Chinese market and (2) oil prices. I personally expect China to hold up better than the US stock market and I expect oil prices to remain fairly strong.
What do you think about Gushan, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 135,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.
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