One Chinese Stock For The U.S. Market Blues

By Penny Stock Detectives

The stock market is a volatile field. Recently, we have seen a fall in the values of large-cap, blue chip stocks in the market and this downtrend can be expected to continue for a certain period. Investor sentiment plays a major role in the movement of the price of a stock and changes with the occurrence of new geo-political events, for example, like those currently existing in the Middle East.

The past few years have seen Chinese stocks perform quite pathetically in the stock market. Was China’s financial system really suffering a downturn or was it all a sort of façade presented to the world in order to keep in check its superficial real estate market? Anyway, now with talks of the rebound in the Chinese economy doing the rounds, it does make us look up and take notice; especially if it is deemed that the nation will pick up the pace and increase its GDP growth in the year 2013!

iSoftStone Holdings Limited (NYSE/ISS) is a company in China that provides information technology services to home clients as well as to those in the  global arena. It boasts of a steady corporate earnings growth owing to its even -balancing segments; i.e. its clients that operate in the communications sphere, the financial services that it renders as well as its sectors of energy, banking and transportation.

For the quarter ended June 30, 2012, the net revenues of iSoftStone Holdings were $92.0 million. This when compared with the same quarter of last year, is an increase by 37.4%. The gross profit of the company in the same quarter this year was $30.2 million; an increase by 22.2% from last year’s same quarter. Expansion is continuous here with a quarter-to quarter (2011 to 2012) increase by 34.1% employees. Not stopping at that, the company is also appending matching facilities for growth- support. No wonder then that its corporate earnings have declined, but even so, the company is confident that this investment will pay off in the long run. After all, it believes that the latest technology and services that it provides will be in continuous demand by large firms with growing business strategies.

iSoftStone Holdings has had to see its stock suffer a declining price in the year 2012. In most likelihood, its downtrend has been broken and although it has posted growing revenues, its investors are feeling the heat and are apprehensive that it’s corporate earnings also likely to dip.

This is the scenario in most cases when there are Chinese stocks involved in the market. If any Chinese firm operates in the nation, investor sentiment is thick with fears about the economy getting hit badly and that the corporate earnings too will suffer greatly.

As for iSoftStone Holdings, the company has been expanding and so the dipping earnings could be overlooked for a few more quarters. The management is solid and has good future plans that have promise of delivering and giving returns to investors. A little breathing space and the company could well see its corporate earnings soar in the market. Putting money in this firm then can be considered as an attractive prospect.

About the Author - Penny Stock Detectives is an expert in penny stocks market. Learn basics of Investing in Hot Penny Stocks and Small Cap Stocks and get Daily Penny Stocks Alerts through FREE Newsletter at http://www.PennyStockDetectives.com.

The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.

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