Intelligent Speculator

JADE – LJ International (NASDAQ) – (Closing Price of Friday: 6/15/08 – $3.50)

LJ International is a company I have followed for a few years and I have written about the company a couple of times on my website. I recommended the company as a short recommendation for a 17% gain last year and I also recommended staying away from the company a few months after I gave my cover recommendation.

In retrospect, my last post to avoid the company because of credibility issues was actually a bad call because I knew speculators were going to bid up the stock price in anticipation of the company releasing earnings. After I wrote my last post on LJ International the stock price more than doubled in just a few weeks. However, the company never reported earnings and the stock price has been meandering ever since.

Last Friday LJ International announced the company was going to release its financial results for fiscal year 2007 and the first quarter of 2008 on June 30. The stock price responded by jumping up 21% on the news and I think speculators are going to continue to bid up LJ International in anticipation of the earnings releases.

Before LJ International stopped reporting earnings the company had shown decent earnings growth and the company was opening up a lot of stores in China. The stock price was also trading in the 11-12 dollar range. If the company releases financials numbers that show the earnings growth has continued the stock price will quickly jump back up (regardless of credibility issues). Therefore, I think LJ International will get a pretty big pre-earnings run and the stock price may potentially get a pop after earnings as well (depending on results and guidance).

I think LJ International is a good speculative play and I am going to give a buy recommendation at Friday’s closing price.

Disclaimer: I currently own shares of JADE.