China MediaExpress Holdings, Inc. (CCME) provides a television advertising network on inter-city express buses in China. It offers advertisements on its network of television displays installed on express buses originating in five municipalities of Beijing.
The company operates in a growing segment and has a forward PE of only 7, and is listed #1 on Forbes China List of Small-to-Medium Sized Companies. An article last week from TheStreet.com contributor Glen Bradford says we are about to see the short squeeze of a lifetime in CCME. “The current short position? Roughly $125 million has been sold short on a company that is trading around $1 billion; that analysts project to make $140 million in fiscal year 2011; that grew revenues more than 100% last year,” writes Bradford.
Many shorts are betting on the fact that China MediaExpress is a fraud, a notion that seems unlikely given the amount of coverage it has received. The company has been fully vetted by Hank Greenberg-led Starr International, as well as by Global Hunter. CCME has a top four auditor in Deloitte, and has a CFO (who just bought $1.5 million in stock) that used to be an auditor at Price Waterhouse Coopers. The company also has signed contracts with Apple Inc. (AAPL), NIKE, Inc. (NKE), and Sony Corporation (SNE) among others.
The stock has quadrupled in the last four months, so it’s still prudent to wait to get involved at the right price. I listed it six months ago at $9-$10 and most recently around $17.50 for a break out. I have not been buying to hold CCME but rather using it as a short term momentum trading vehicle. The stock hit $24 before now pulling in sharply below $20. It needs time to consolidate in the $19-$24 range before another move, but stay tuned for further updates on CCME.
*DISCLOSURE: No position
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