Thursday, March 15, 2012

Should You Buy LPH?

The latest penny stock that has caught my attention, thanks to Google ads, is  Longwei Petroleum Investment Holding Limited (LPH). According to Google Finance, Longwei is an energy company engaged in the wholesale distribution of finished petroleum products in the People’s Republic of China. The Company’s oil and gas operations exist entirely in the People’s Republic of China. So, we aren't talking an international company. But according to the pump by Small Cap Watch List, LPH is is trading for less than 50% of its book value, which means it may be cheap.  LPH generated nearly $500 million in revenue during fiscal 2011, and its adjusted net income surged 44% to $68 million, very nice, and they are talking about paying out dividends in 2012. And, they have 0 debt. Something I always look for in a stock.

This all seems great but some think it may be getting riskier to invest in China. Plus, the oil game is a highly competitive field. And though gas is high right now with oil up, I wouldn't say this will last forever.

So, I may consider investing in LPH, but it's been moving up lately. Just today it gained 14% on heavy volume. This could mean new highs for the stock in coming weeks. Personally I would wait for a pull back. Of course the choice is yours to make. Just be careful.

 I don't own any stock of LPH, and if I buy any, it won't for at least 72 hours.