| Best of the Best: Today's Top Investment Ideas |
| Fuqi (FUQI): Peter Lynch jewel? |
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| Wednesday, 08 July 2009 | |
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"The company develops, promotes and sells a range of products in the Chinese luxury goods market.The compay has 69 retail jewelry counters and stores in China. "According to the Lynch model, this company would be categorized as a fast grower. "The Lynch strategy suggests that investors should examine the P/E (10.82) relative to the growth rate (42.99%), based on the average of the 3, 4 and 5 year historical eps growth rates, for a company. "This is a quick way of determining the fairness of the price. In this particular case, the P/E/G ratio for FUQI (0.25) is very favorable. "This methodology favors companies that have several years of fast earnings growth, as these companies have a proven formula for growth that in many cases can continue many more years. "The Lynch also likes to see earnings growth in the range of 20% to 50%, as earnings growth over 50% may be unsustainable. The EPS growth rate for FUQI is 43.0%, based on the average of the 3, 4 and 5 year historical eps growth rates, which is considered 'OK'. "This methodology would consider the Debt/Equity ratio for FUQI (19.97%) to be acceptable (equity is three to ten times debt). This ratio is one quick way to determine the financial strength of the company." |
In his
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Jack Adamo
For sophisticated international investors, 
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