One of my favorite China-based stocks is soaring today. Shares of Fuqi International (FUQI) have traded as much as 18% higher in this morning’s trading. Over the last three-and-a-half months, Fuqi International has risen over 470%.
Fuqi International designs, manufactures and distributes a wide selection of jewelry. The company’s product line consists of more than 20,000 items made from gold, platinum, diamonds and other precious stones and metals.
Fuqi sells its products domestically through a network of more than 600 distributors. Its other customers include wholesalers and retailers including department store and independent jewelry stores.
With China’s booming middle class and strong consumer spending, coupled with the rising price of precious metals like gold and silver, now is a great time to be in the jewelry business in this country. Just look at the numbers: In the first quarter, Fuqi’s earnings rose 52% to $9.7 million or 45 cents per share, which was 32.4% higher than analysts’ expectations of 34 cents. During the past four quarters, the company’s sales rose an impressive 41% to $109.4 million in the first quarter.
I also like that Fuqi’s operating margins continue to expand impressively to 16.5%, which is up 5.1% from its operating margins in the same quarter a year ago. The company raised its full-year 2009 earnings outlook to between $1.49 to $1.63 per share, up from its prior view of $1.35 to $1.41 per share.
As long as precious metals stay pricey and consumer spending remains strong in China, Fuqi International is a good buy.