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Cleantech Solutions’ (CLNT) Stock Price Is Making A Clean Getaway

 November 16, 2012 10:32 AM


(By Rich Bieglmeier) Relatively unheralded Cleantech Solutions International, Inc. (CLNT) experienced the biggest increase in twits on Thursday, jumping more than 1,130%. While shareholders wish the stock did the same, its 41.45% gain isn't too shabby.

China-based, CLNT is a leading manufacturer of metal components and assemblies, primarily used in the wind power, solar, and other clean technology industries. On Tuesday, November 13, 2012, the green-tech company reported earnings that pleased traders and Wall Street.

In the third-quarter press release, Jianhua Wu, Chairman and Chief Executive Officer of Cleantech  said, "Against a weak macro-economic background, we are very pleased to have achieved 48.5% growth in revenues and 107.5% growth in net income during the third quarter of 2012. Our performance was driven by a sharp improvement in demand for our next generation of dyeing machines as well as solid growth in forged products for non-wind applications."

Gross profit for the third-quarter of 2012 increased 64.2% to $4.3 million, versus $2.6 million for the same period in 2011. Gross margin increased to 24.9% during the quarter, up from 22.5%. Net income for Q3 2012 was $2.4 million, or $0.88 diluted earnings per share, compared to $1.1 million, or $0.46 diluted earnings per share, year-over-year.

The excellent profit report-card catapulted Cleantech's stock price into vertical flight. Since earnings, shares have zoomed from $2.61 to Thursday the 15th's close of $3.85. Lest you think the spike is an unusual move, in early April, shareholders buckled up for a launch from $1.80ish to $5.75 in a matter of days. That sort of move is pulling and making some g's. This time is a little different though as volume pales in comparison to April's intensity.

That being said, iStock can envision traders taking CLNT to $4.50 to $5 in this running with the bulls phase. If the stock can crack $5, then $5.75 could be its destination, once again.

Fundamentally, many Chinese listed stocks trade with crazy low metrics. For example, CLNT's trailing twelve-month P/E is 2.21, despite 107.5% net income growth. Cleantech is priced at just 14 cents for every dollar per share in revenue and 90% below its book value of $28.66.  We have read that these Crazy-Eddie valuations stem from a lack of confidence on Wall Street for accounting standards in China. But hey, it can't be any worse than how Uncle Sam keeps the books – no?

If/when companies like Cleantech Solutions International, Inc. (CLNT) are valued on par with their American counterparts, iStock would be putting a 3, 4, or 5 in front of $5.75.

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