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: Shareholders of Hollysys Automation Technologies
So what: Last week, Hollysys investors cheered a sudden run-up in their shares' price. But no sooner had the shares run up, than analyst Roth Capital (a previous backer of the stock) brought them tumbling down again with a downgrade to neutral.
Now what: That leaves us with yet another Chinese small cap that by all rights should be a bargain (11.6 P/E ratio, 17.5% growth rate), but which trades like investors have little faith in its numbers. Hollysys says it's profitable, yet it burned more than $31 million worth of cash over the last 12 months. Granted, the company still has $96 million more in cash to burn, against less than $42 million in debt. But if you're looking for a company that's growing its cash pile, rather than shrinking it, you'd probably best look elsewhere.
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Fool contributor Rich Smith holds no position in any company mentioned. Click here to see his holdings and a short bio. 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.