Steel player in China sees stock price rocket higher

If a stock can officially be on fire, it is China Precision Steel (NASDAQ: CPSL, Bullboard). Shares have moved from under $4.00 to over $7.50 in two days.

The company deserves it and may have further to run; its 52-week high is $12.65.

For the first quarter, revenue at the company grew 61% to $18.7 million. Operating income was up 137% to $4.4 million. Sales outside China were up almost ten times to 19% of total revenue.

The building boom in China is likely to help CPSL for several years. The risks in the company are the rising costs of iron, which could pinch margins, and any sharp drop in China's GDP. So far, so good.

CPSL's large production facility only operates at 50% capacity now. That is something of a drag on expenses, but it means as the company grows, it should not have large capex.

Owning a company like this with Chinese GDP going up 10% per annum is a license to steal.

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From the news desk of 24/7 Wall St.

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