Why in my opinion Global gains should look at picking CAAS?"All the record Auto sales in China reported over the summer means one thing, CAAS had a monster summer qtr."
Here is the link to China's Record Auto saleshttp://www.theautochannel.com/news/2009/10/20/481944.html
GG has rec'd 4 automotive stocks over the years and sold them all. I'm not sure that's really their sweet spot for stock picking.
Just because u failed in the past does not mean going forward you can't get better, if everyone thought like that they would never go to practice.
Just because u failed in the past does not mean going forward you can't get better -- IBDCan't argue with that!Speaking just from my own point of view and lotsa years in the auto biz (OEMs and suppliers)......its not easy to pick winners in the auto sector. Its very hard to establish an enduring advantage (moat). BMW is the only public OEM that comes to mind as having achieved that to a degree (maybe Honda) and I can't think of any suppliers with such an edge, although Bosch and Denso come close.So....Without an enduring advantage, do we need to give up hope? Of course not....but it changes the nature of the game. The alternative means being able to satisfy yourself that a particular company is going to generate outsized gains (revenue, profit, market share) while maintaining a sustainable financial structure....and that the market hasn't priced the company so high that you have already lost any margin of safety.Oh....and you have to know when to leave....because those outsize gains are likely to be due to temporary factors (market hypergrowth, few locally active competitors).....and you'll want to figure that out before the rest of the market figures it out.Its not easy (Beatles music on my mind now....)...Is CAAS such a company?Maybe on the basis of being able to grow the company.....I *personally* am not real interested....because the current price is up there pretty high in the thin air compared to earnings....especially considering other Chinese companies many of us here are invested in...and *their* PEs. "Yeah, but they're doing *great*! Are they? Certainly the top line and bottom lines are doing nicely, but look at the lack luster ROI and ROE. There isn't a whole lot of room for error in the operation and a little bit of price competition might be able to bring the parade to a bitter end.Nevertheless, maybe an investment would do really, really well....but if you hear a bubble popping, it may already be too late to head for the exit.That's my own particular perspective. A bit too negative? Depends....I'd rather be critical of investing in something up front than be regretful later. There are lots and lots and lots of investment opportunities out there.....you can afford to be critical.....and aim for the relative no-brainers instead.RobRB Home Fool
Rob interesting post but you do realise that CAAS has patents on many of its parts. Also did you see that as soon as I posted about CAAS on CAPS the shorts flooded in causing it to drop from $12.10-12.20 at the time to current $11.59 on only 50k volume. It took 155k volume to drive it to $12+So if anytime was a time to enter CAAS its now at $11.59CAAS earned .21 eps last qtr. Everything in China's sales from June to Oct. points to CAAS hitting .26 to .31 range this qtr.
10/20/09 China's Auto output hit 10 Million mark and on pace for 12.6M in 2009 an all time RECORD. http://autonews.gasgoo.com/auto-news/1012607/China-09-auto-o... Shanghai, October 20 (Gasgoo.com) China's production of automobiles since the beginning of this year hit 10 million units today, making it the third country in the world to surpass the annual output mark of this level, xinhuanet.com reported. The achievement was announced at a celebration jointly sponsored by theChina Association of Automobile Manufacturers (CAAM) and China Society of Automotive Engineering at FAW Group Corp. headquarters in Changchun, capital of northeast China's Jilin province. FAW used the event to launch its Jiefang truck's new model, with the first vehicle rolling off the production line with the serial number 10000000, which means this new Jiefang truck is the 10 millionth vehicle produced in China this year. Only the United States and Japan have previously passed the annualproduction figure of 10 million, the CAAM said. For the first nine months of the year, industry-wide vehicle sales in China rose 34% to 9.7 million, with passenger-car sales up 42% to 7.2 million units. China's auto sales should soar to 12.6 million units this year, up 35% from 2008, boosted by subsidies that the industry is lobbying Beijing to extend, a government researcher said recently. For more information please visit http://autonews.gasgoo.com/index.html
Rob interesting post but you do realise that CAAS has patents on many of its parts. -- IBDThat's cool....no, I didn't know that.But....the flip side:If you, as an OEM or as an aftermarket customer, want an alternator....its pretty much a commodity product regardless of whether one alternator has a trailer full of patents attached. The OEM is mostly looking at:A) Does it pass my tests?B) Does it meet my quality, cost, weight, functional requirements?The aftermarket is even simpler: Is it cheaper?Unless a patent gives a big edge in the overall picture of the above criteria, it really doesn't matter if it'll also cook noodles.I see from the company profile that they specialize in steering systems. That also is a commodity type product, ie no moat....unless this particular Chinese company has, say, a much cheaper cost structure than Uncle Ho's Chinese Automotive Knock-offs down the street.I'm not trying to rain on your parade, just pointing out the way the business works.CAAS earned .21 eps last qtr. Everything in China's sales from June to Oct. points to CAAS hitting .26 to .31 range this qtr.Well, that's a lot more attractive of an earnings picture than what I noticed. Obviously, I didn't look close enough. Well, that could make it interesting then. When do the earnings numbers come out? ;)RobRB Home Fool
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