2/17/2010 GeoUpdate - China Agritech Inc (NASDAQ:CAGC), Culp Inc (NYSE:CFI)

Wednesday, February 17, 2010, 11:12 AM ET -

China Agritech Inc (NASDAQ:CAGC)

Added to GeoBargain list on 8/24/2009 at $2.95 ($5.90 post 1 for 4 reverse split and a 2 for 1 forward split).
Current price: $21.60

CAGC had a huge run from in its initial inclusion on the GeoBargain list on. The company should report 2009 EPS of close to $1.30, giving it a trailing P/E of around 16. Because of the stock’s low P/E, we will keep it on the GeoBargain List. We generally remove a stock from this list if it attains a trailing P/E of 25 or a forward P/E of 15. The company has issued strong 2010 revenue guidance. However, given the stock’s huge run, uncertainty surrounding 2010 EPS and CAGC's recently shelf offering (giving them the ability to issue stock) may make it prudent to take some profits off the table.

We do think that management has an under-promise over-deliver type of philosophy, so we will monitor developments closely for:

News that would increase guidance such as an acquisition
Clarity on 2010 EPS Guidance
Trading opportunities if the stock pulls back

Culp Inc (NYSE:CFI)

Coded as GeoSpecial on the Radar on 12/7/2008 at $8.50. See alert.
Issued a trading alert on 2/8/2010 at $11.50. See alert.
Current Price: $15.88

We are removing CFI from the GeoSpecial on the Radar List and cashing in on our positions initiated on February 8, 2010. The stock's price elevated much faster than we had anticipated and with a P/E of 15 on 2010 EPS, it seems fairly priced in the short-term. We will continue to monitor CFI as the company has been smashing analyst estimates.

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