CAAS – China Automotive Systems (NASDAQ) – (Closing Price – $6.85)
China Automotive Systems announced impressive first quarter results today and the stock price responded by trading up 25% on the news.
China Automotive Systems reported revenue of 41.47 million and diluted EPS of 0.18. Revenue improved 46% year over year and 10% sequentially. Diluted EPS improved 157% year over year and 100% sequentially.
Even with the big jump today China Automotive is only trading at a trailing PE ratio of 14. That is very cheap considering the strong growth in revenue and earnings. If China Automotive Systems can continue to show both top and bottom line improvement in future quarters China Automotive Sytems will reach a much higher share price. I think the share price could easily retest its highs of the past few years ($12 – $14 range) in the next few quarters. Therefore, I think it would be wise to be patient and hold onto your shares.
Short term I also think the share price will see more upside. Over 7% of the float is short and I think the shorts will continue to be squeezed over the next few days.
I don’t see any reason to sell I would continue to hold your shares of China Automotive Systems.
Disclaimer: I have no position in CAAS.





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