Monday, July 13, 2009

Weekly Stock Pick

Buy Sell Hold
The Market Week Ahead

Earnings season is coming up again starting with the financials, technology and drug companies. A second stimulus plan is being talked about, oil is below $60 again with traders saying buy. Equity traders are wondering about President Obama’s approval rating possibly going down and any possible policy changes because of that. During this recent market run up, individual investors have been investing more money into mutual funds, and ETF’s than normal while corporate insiders have been taking it out 27 times faster. Click here to find out if the bear market’s most violent decline is right around the corner.

My Stock Pick This Week

Is a Chinese life insurance company. China is a great place to invest long-term with an economic engine of 1.3 billion plus people. The growth potential in the insurance industry is massive to say the least. This insurance company currently has total assets of about 1 billion Chinese Yuan or $150 million, with liabilities of about 550 million yuan or $80 million, which is about a 2:1 equity to debt ratio. But it may not be as good as it looks currently. 460 million Yuan or almost half of their assets are invested long term in Chinese listed banks. Last year as the Chinese market made a big correction along with this insurance company’s big investments in the Chinese banks resulting in a single digit investment loss for the year for this Chinese insurer. At a current price earnings ratio of 36, it’s a short-sell now and buy back later at lower price valuations to make a long story short.

Sell-Short China Life Insurance Ticker LFC

Sell Entry: 59.62 to 58.43

Stop-Loss: 61.85

Take Profit Areas: 57.30 to 55.04, 52.89 to 52.09, 51.36 to 50.59, 47.62 to 46.90, 39.96 to 39.36

China Life Insurance Company Profile

China Life Insurance Company Limited provides various insurance products to individuals and groups in China. The company operates in three segments: Individual Life Insurance, Group Life Insurance, and Accident and Health Insurance. The Individual Life Insurance segment offers participating and non-participating life insurance and annuities to individuals. Its products comprise long-term health and accident insurance products. The Group life insurance segment provides participating and non-participating life insurance and annuities products to companies and institutions. It offers various long-term insurance products. The Accident and Health Insurance segment provides short-term accident insurance and health insurance to individuals and groups. The company distributes its products through its direct sales force, exclusive agent force, and various intermediaries, as well as through bank assurance arrangements. The company was founded in 1949 and is based in Beijing, China. China Life Insurance Company Limited is a subsidiary of China Life Insurance (Group) Company.

Click here to review and trial the Trading Software we used in determining our short position on LFC.

Click the China Life Insurance Stock Chart for a larger view.