It's had a 76% upward run in only 34 trading sessions. Does anyone seriously believe that isn't the result of the Chinese demand and the steel price bottoming?
CHOP had a parabolic move in December with a high of 2.37, then corrected for a couple of weeks before having another parabolic move this month. It will probably correct from here to settle somewhere above 2.00.
* Bullish indicators are that its price has bottomed with that of steel. It's going to have a 50/100 golden cross in about three days. Then it will have a 50/200 golden cross in about a month. A new IR firm will be nice; hopefully they can take CHOP out of the amateur leagues it has been in. If they released earnings before April that would be a good sign the company is heading in an American-investor friendly direction. On top of that, the valuation story continues to be solid and widely ignored. In a good year this company has the ability to increase its value by 50% on paper alone; put in a dollar, get back a dollar fifty.
(An aside -- frankly, this double-talk from China is starting to get on my nerves. On the one hand they view being listed on an American exchange as a source of pride. And it should be. Then they refuse to treat their investors the way American culture indicates you should; no updates, no communication, no transparency, dividends are anathema, etc. So the demand is lower and the price movement isn't as good as American stocks. Then Chinese companies get upset that their stocks don't do as well and say they don't understand why. There's an American proverb that says you can't have your cake and eat it too. If you want your stock to behave like an American one, then you have to have your company behave like an American one. You can't have it both ways.)
* Bearish indicators are that CHOP's profit margin dropped off the charts and there's little chance they can make their 2012 guidance. The average steel price in Q3 and Q4 is about this same, so while Q3 caught them by surprise they need to earn 0.19 per share in Q4, which is more than they got in Q2 when prices had peaked. Whatever your inventory, you can only make as much money as your product is worth. So when that earnings report comes out, who knows how the market will react. Then of course there's the SEC black swan in the distance threatening to delist China. And the possibility that China could have fallout from propping up demand by stimulus. Lastly, wasn't this supposed to be a growth company? CHOP wasn't just making a product and keeping profits, they were expanding, increasing, expanding while credit was cheap, etc. So we've completely forgotten that due to the steel collapse and started rethinking in terms of "let's just get back to a profit margin greater than 15%?
I'm net bearish on CHOP in the short term and bullish in the long term. There's no reason it can't be at 5.00 by the end of the year, but I don't think there's going to be a pretty line from here to there.