The concept is:
1. The increasing demand for graphite is creating shortages which will push the price up. CHGI will be able to take advantage of that, through hedging and, even more so, through purchase of a mine.
2. CHGI occupies a special niche in high margin, pricey graphite products--which are in high and increasing demand--that sets it apart from almost all other Chinese graphite companies.
3. China is moving into the twenty first century at an accelerating pace and needs, and will support, CHGI.
4. Only CHGI (and, perhaps, one other domestic Chinese company) has the potential to be a domestic graphite supplier to China's huge nuclear industry.
None of those concepts has yet been proven out in its operations. Sure, it is starting to gear up by buying raw materials in anticipation of the above but mostly it just has debt to show for its efforts so far. Sure, it talks about acquisitions of nuclear machinery and of a mine but has not yet moved on either of those. Sure, graphite prices are up some but they have not really broken out like other metals yet. Sure, CHGI says it has an advantage over other graphite firms in the high purity, specialized product area but the proof of that is not yet evident from sales or margin results.
Conclusion: CHGI is a concept stock.
If you believe in the concept, a buy here coupled result in huge profits. If you require results and not just a concept (what skeptics would call "pie in the sky"), stay away for a few quarters and see if the concept pans out.
"I am underwater everywhere" Yup. But the broad markets don't really reflect what's going on. Many of these stocks have acted like we were back in 2008. Thanks for the article. good luck (BTW, like you, I did very well with AMCF)
I know, mrfastidious, and am way under water every where. Have a gander at the below linked article, and note especially item 8. I agree with the article and I believe item 8 is very important for CHGI, along w/ the massive influx of cash China will be pumping into its "strategic sector."
I will tell you this much: There are MANY stocks that I follow (not all that I own), and a ton of them are as badly beaten down as this. It's the market. Unfortunately the DOW Jones averages really dont reflect this, as the market averages are basically even for the year. 75% of small cap stocks, have been truly hammered this year.
Well, misterfastidious, I own a lot more shares than I did when I pumped it at $1.50. It is just inconceivable to me that this can remain at a market cap of $15 million dollars.
The nuclear graphite machine that CHGI will be buying, alone, costs $18 million. The replacement cost of the current plant, without nuclear, would be over $60 million. Probably way over.
I do not see China closing down and going out of business, nor do I see them abandoning their movement into the modern world.
As you say, its not my fault that investors are throwing away their shares for practically nothing. I just won't do that. I bought some more this morning .
Good Post: I am trying to find stocks that provide good entry point to play the emerging graphene tech surge.
Any one have suggestions. Most of the most promising targets are still start-up and or private concerns.
One Link: http://nextbigfuture.com/2011/04/commercialization-of-graphene.html
There are about two thousand or so short shares. The stock is at or near its 52 week low. This stock was never heavily shorted. Ordinary, retail investors cannot short a .60 stock.
Maybe you could make some constructive contributions.
Concept stock. I just wish it had some volume. Who buys 100 shares at a time at $.59? Someone jump up and at least buy some of mine; all I need is to sell the 1350 shares at $.70 to hit my tax write off for the year. I would lower the orice to $.59, but no one will even buy 1350 shares at that price all at once, so I'm not selling to benefit bottom-feeders. I don't care about the other 40,000, I'm in those for the long haul.
Wait until after the International Graphite conference in London next week and I bet this stock falls even more...there are several other graphite projects in the world in process and mining with lower costs than this Chinese "operation". I might sell after the conference and take my tax lumps now rather than later.
No, I do have to "ride it out". I was one of the people who watched you say when the stock was $1.50, that it probably has reached it's low and what a spectacular value it is. Yeah great, now it's 67% cheaper. It's not your fault. The bottom line is anyone who buys stock based on a message board prophet deserves to lose money. Just great, I'll wait two year more.
If I said that it probably bottomed when it was at $1.50, I apologize. Two things happened since then that I hadn't foreseen: The complete collapse of Chinese stock prices in general. I believe that the "anti-Chinese mania" has been way overdone and that many babies were thrown out with the bath water. Secondly, I did not fully appreciate how expensive it would be for CHGI to gear up. The buy forwards for both the old and new plants are expensive. The purchase of a mine would be expensive too--though that expense would be offset by not having to purchase raw materials from vendors any longer. The nuclear machine should be paid for out of cash flow, or just a very short term bridge loan.
In summary: I didn't foresee the collapse of support for Chinese stocks and did not fully appreciate the cost of gearing up for CHGI.
Having said all that, I have seen absolutely nothing that casts doubt on the concept of this stock. There is no reason whatsoever to believe that the business plan is not working. If it does work out, we will look back on these days as having been good buying opportunities.
Best wishes to you.
P.S. I started buying this quite a while ago at $.90. I bought some when it was over $2. I have bought a lot since those days and buy some almost every day, including today. I now have more shares of this stock than I have ever had of a single stock, by far. Good luck to both of us.
Personally I'd rather have a stock that moves up than a "concept". This .60 is atrocious. Why doesnt anyway else know about it? Well it's to late now, now I have to ride it out like the rest of us.
If you are looking for a stock that will go up a lot in the very near term, you are in the wrong place. The time frame on this one should be a minimum of two years and five would be even better.
If the concept of this stock is right, it could easily have a market price of $18 to $20 in five years. That would be a 25+ bagger. Buy $5000 worth now and have $125,000 worth (maybe, if the concept works out like I think it will) in five years.
Don't want to wait that long? Too risky to buy a concept stock? Need quicker money? If so, sell and move on.
You do NOT have to "ride this out."