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What: Shares of Chinese fertilizer producer China Green Agriculture
So what: U.S. investors have had plenty to think about on their home shores lately, so the troubles among Chinese small caps have been mostly relegated to a back burner. With its year-end report though, China Green made another bid to convince investors that it is truly the real deal. For its fiscal fourth quarter, the company delivered revenue growth of 272% and per-share profit growth of 52%. The respective revenue and earnings tallies of $60.3 million and $0.38 both topped Wall Street's estimates. The company's CEO cheered the strong performance of an acquisition made last summer and said that the company has "established a solid track record that we can replicate in the future."
Now what: Performance is only part of the issue when it comes to Chinese small caps like China Green. After a rash of companies dabbling in varying flavors of fraud, investors have become deeply skeptical of the entire segment of the market. That means that China Green has an uphill battle in convincing investors that its success is legitimate, but it also means that if there is veracity behind the numbers, investors can pick up shares at ridiculously cheap prices today. On the basis of the company's just-completed fiscal year, shares currently change hands at a mere 3.9 times earnings.
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The Motley Fool owns shares of China Green Agriculture. Motley Fool newsletter services have recommended buying shares of China Green Agriculture. 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.
Fool contributor Matt Koppenheffer does not have a financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.
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