Thursday, September 29, 2011

LPH Emerging Market Penny Stock

In the quest for an attractive penny stock you must weight the risk of investment as well as the overall stability of the company. One avenue investors are using to increase return potential is by investing in emerging markets particularly China due to the rapid growth of their economy. This penny stock LPH is an energy company with primary business functions inside of China that should benefit from the increased consumption of the Chinese energy market.

Longwei Petroleum Investment Holding (LPH)
Current price: $0.92
52 week range: $0.92 - 3.95
Market cap: $95M

Longewei Petroleum is a wholesale distributor of finished petroleum products in China acting as a middleman for gas stations that are not licensed to buy directly from refineries. They sell diesel, gasoline and fuel oil. They have storage for their products of 150 metric tons.  

The reason I like this penny stocks is the fact that their earnings per share are over half the stock price. Which means their P/E is 1.57. The stock price is also the lowest its been since its IPO. The company is still showing revenue growth.

As seen in this graph the company estimates they will finish 2011 with $500M in revenue and 2012 with $576M. Their current market cap is around $95M which means their revenue will be five times their market cap. The company reported year end revenue just under expectations which may explain some of the recent sell offs as well as the stock market stalling and fears of another recession pushing oil prices lower. If in fact the recent sell off was just a lack of confidence that will correct itself this penny stock could be a very profitable investment.

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