China Stocks

Many of you asked me to fire up my screeners with a focus on Chinese/Asian stocks. Love'em or hate'em, that's where many investors are now focused.

While some have argued that now is not the time to buy in this area of the world, my own view is that like every market, overly broad generalizations can get you into serious trouble.

This is not just a copout, but frankly a recognition that as valuations do go up and growth begins to slow from its current pace (and, yes, it will slow), investors will need to become far more selective in their choices. In other words, those who think that every stock associated with China is going to do well may forget that in previous booms a lot of junk stocks go up with everything else. Anyone remember Pets.com?

Likewise, those who think every stock in China is a short just because of the tremendous gains we've seen there are likely to get their head handed back to them if they try to press shorts in the wrong stocks. Remember, bull markets can often last far longer than anyone can remain solvent so pick your bets carefully on both sides of the fence.

Using Trending123's China stock lists as a starting point, I ran several fundamental focused scans to sift through these stocks to find the top high and low risk situations based on those scans. While my screens are not infallible, they've often helped me narrow my focus in markets in order to avoid just chasing those stocks which simply have already performed so well. My goal here is simply to sift through those which my scans suggest offer the best and least opportunities when evaluated in terms of both risk potential and their raw underlying fundamentals. These are not technical filters per se, but rather focused on whether the underlying valuations can support the current price and additional gains.

Based on that research, I've created two model portfolios of 15 stocks each. The first portfolio is those which are of low risk (i.e. have a better than average chance of moving higher) and those which are of high risk (those where the risks outweigh the rewards). Again, both of these portfolios offer a working research list with a focus at both the top and bottom end when evaluated for its fundamentals.....[READ]