Last December, over 100 stocks were featured in our Top Picks for 2007 report. Now, at mid-year, we turn to the 20 advisors whose picks showed the strongest gains to get an update on their previous picks, as well as a new favorite stock for the second half of the year.
Ian Wyatt, editor of The Growth Report, chose LJ International Inc. (NASDAQ: JADE) as his favorite stock for 2007. Its 173% gain as of 6/1/07 has made it the number one performer among all stocks in our Top Picks for 2007 report. Here is Ian's original recommendation for JADE and his current favorite stock for the rest of 2007.
Updating his recommendation, the advisor now says, "LJ International continues to capitalize on China's extraordinary growth and accompanying demand for luxury goods -- specifically high-end jewelry -- by expanding its network of ENZO branded jewelry stores.
"Since 2004, when LJI began opening retail jewelry stores in China, it has opened more than 45 stores, established a presence in all of China's major cities, including Hong Kong and Macau, and established itself as China's #1 foreign branded jewelry retailer (Hong Kong and U.S. based), ahead of Tiffany & Co.
"The company has plans to more than double its network to 100 stores by year-end 2007, ahead of the Beijing Olympics. These stores generate robust sales, and, more impressive, nearly half of the existing stores are already profitable. Continued growth of its retail operations will enhance LJI's profitability since ENZO gross margins are twice those of the wholesale business.
"For the full year 2006, ended December 31, 2006, LJI offered revenue guidance of $123 million, an increase of approximately 30% over revenues of $94.6 million in 2005. LJI expects net income to increase 78% to $6.0 million, or $0.34 per share, from $3.4 million, or $0.24 per share, in 2005.
"The market dynamics, particularly as they relate to China's burgeoning middle class and its associated massive buying power, are such that a firm like LJ International, which has strategically positioned itself as a retailer of luxury goods, should continue to prosper.
"Analysts expect LJI to earn $0.55 per share on revenues of $157.1 million in 2007 and $0.82 on revenues of $197.7 million in 2008. We continue to like LJI and its prospects. We feel the company's performance and upside potential justify a buy rating and price target of $15.00, which represents 18 times the forward year earnings estimate."
See all 20 stocks the advisors picked for the second half of 2007.
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