"New Oriental Education (NYSE: EDU), which offers English language instruction to Chinese students, recently fell sharply after disappointing the Wall Street crowd," says Tony Sagami.

In his The Asia Stock Alert. the China stock specialist suggests, "This pullback is creating a buying opportunity. Indeed, this is your big chance to buy it on sale." Here's his review.

"Digging deeper, EDU’s numbers contain both bad and good news. Among the good news, EDU earned $1.57 per share of profits last quarter, which is exactly what the consensus forecast was and 27% more than the same period last year.

"In addition, business is growing strongly; sales increased by 26% to $149 million. And the demand to learn English is as strong as ever.

"The top three growth areas were kid’s English (up 34.1%), middle and high school English (up 18.2%), and overseas college test preparation or TOEFEL (up14%).

"Further, deferred revenue (the backlog of signed up students waiting for classroom space) jumped by 36% to $58 million. This revenue hasn’t been recognized yet, so a ton of sales are just waiting to hit the bottom line.

"EDU also opened 17 new learning centers in Q3, bringing the total to 287. Here is a statistic that should impress you — EDU spent only $5.2 million to open those new centers. Talk about efficient and thrifty!

"The only reason EDU dropped is that it warned that revenues were slightly below expectations. How come? Some parents were worried about the swine flu and didn’t want their children in a large urban classroom.

“The company estimates that the H1N1 flu pandemic negatively impacted the top line growth by 2% to 4% with a more significant negative percentage impact on the bottom line for the quarter. Going forward, EDU forecast that its Q4 revenues would be $60.8 million to $62.8 million.

"The only question you have to ask is whether or not this swine flu scare will permanently depress EDU’s enrollments. The answer is absolutely not.

"In our view, this stumble is a short-term problem and nothing that derails the main reason we own New Oriental Education — learning to speak English is the quickest and surest way to improve a child’s opportunity to succeed as an adult.

"If you already own New Oriental Education don’t worry one bit. If you don’t own New Oriental Education yet, this is your big chance to buy it on sale."