"Five years ago, we presented a strong case for investing in China; we felt so compelled by the opportunity that we expanded our research team and opened a regional research office in Hong Kong," says Jim Oberweis, Jr.

The money manager and editor of The Oberweis Report reviews his current outlook on China, as well as some of his favorite U.S.-listed small cap Chinese companies that are currently in our portfolio.

The advisor explains, "We just recently celebrated the five-year anniversary of our Oberweis China Opportunities Fund; since its inception, the fund returned an average annualized gain of 22.94%.

Analyst Upgrades

• Barrington upgraded Global Payments (GPN) to outperform from market perform following the company's Q3 results and raised earnings guidance.
• FBR Capital upgraded Foot Locker (FL) to outperform from market perform to reflect the company's improving comps and international expansion. The firm set a $17 price target for shares.
• Keefe Bruyette upgraded Legg Mason (LM) to outperform from market perform and raised its target for shares to $37 from $34.
• Acuity Brands (AYI) was upgraded to buy from hold at BB&T.
• Ann Taylor (ANN) was upgraded to hold from underperform at Jefferies.
• Waddell & Reed (WDR) was upgraded to buy from hold at Citigroup.

"Happy New Year. No, I'm not seven weeks late. 1.3 billion Chinese are celebrating the biggest holiday of the year -- Chinese New Year," notes Tony Sagami.

The contributing editor to UnCommon Wisdom explains, "The Lunar New Year is considered to be a combination of Thanksgiving, Christmas and New Year's all rolled into an elaborate celebration of reflection, gratitude, renewal and hope. It is the single most celebrated holiday in China.

"The Chinese people's growing appetite for travel is a big story and it has put two Chinese stocks into our current list of our top ten stock ideas," says technical and fundamental stock expert Mike Cintolo. In his The Cabot Top Ten Report, he takes a look at Home Inns (HMIN) and Ctrip.com (CTRP).

Cintolo explains, "Ctrip.com is la Chinese online search engine that has taken a U.S. Web business (in this case Expedia) and translated it to suit Chinese tastes.

"The company started by aggregating hotel vacancies and offering them online at a discount. Now, Ctrip.com has broadened its offerings to include airline tickets and packaged tours inside China.

"The Olympics have long been a boon to stock markets of host countries," notes Tony Sagami, a leading global stock advisor with a noted specialty in Asian markets.

In his Asia Stock Alert newsletter, he notes, "I believe the chief beneficiaries of the Olympic Games will be consumer and travel-related stocks. And within these sectors, I've chosen six stocks poised to bring home Olympic gold from Beijing."

"We saw a 19% gain in the Spanish stock market in the 12 months before the 1992 Barcelona Olympics, and the 27% gain in the Greek stock market in the year before the 2004 Athens Olympics. And those countries were not growing at a fraction of the breakneck pace that China is. So it wouldn't surprise me to see the Chinese stock market do even better.

Olympic Gold Winner #1: China Mobile (NYSE: CHL):

"It seems like every person I see in China has a cell phone glued to their ear. And the cell phone is not just the primary voice communication medium in China; it is also the common way most Chinese access the Internet and email. In China, the cell phone 'is' the personal computer.

"Heck, most new high-rise condominium and apartment complexes being built in China aren't even wired for land lines. Once you understand the device's role, you'll see why China Mobile has more cell phone users (360 million) than the U.S. has people. I expect a lot of cell phone calls and text messages during the Beijing Olympics!

MOST NOTEWORTHY: GTX Inc, Akeena Solar and NexMed were today's noteworthy initiations:

• Rodman & Renshaw is positive on GTX Inc's (NASDAQ: GTXI) opportunity for Acapodene in prostate cancer and Ostarine for muscle wasting. The firm started shares with an Outperform rating and $22 target.
  
• Akeena Solar (NASDAQ: AKNS) was initiated with a Buy rating at Merriman. The firm believes the company is positioned to generate a high margin recurring revenue stream through the licensing of its Andalay proprietary rack mounting system.
  
• Roth Capital expects NexMed's (NASDAQ: NEXM) Phase III data for its antifungal Lamisil, expected in mid-2008, to be positive. The firm, which started NexMed with a Buy rating and $2.50 target, said early clinical data demonstrated a roughly 7-8X improvement in fungal reductions versus the competitive topical formulation sold as Penlac. The analyst said Phase III trial will admittedly have a different end point, but this data makes them bullish.

OTHER INITIATIONS:

• Lehman initiated Liberty Entertainment (NASDAQ: LMDIA) with an Overweight rating and $30 target.
  
• Canaccord Adams assumed Priceline.com (NASDAQ: PCLN) with a Hold rating and $120 target.
  
• Home Inns (NASDAQ: HMIN) was started at Morgan Stanley with an Overweight rating and $28 target.

This is the second in a series of picks this week looking at companies doing business in China.

"We'll leave the light on for you" is a catch phrase everyone knows here in the States -- Motel 6 (and other similar, budget hotel/ motel chains) have been a staple in this country for years. Now, the budget hotel model has hit China, and not a moment too soon. With the influx of tourist dollars, not to mention the rapid growth of international business in Mainland China, the need for economy hotels is going through the roof.

Home Inns & Hotels Management Inc. (ADR) (NASDAQ:HMIN) is a one-stop shop in the world of economy hotels and inns -- in other words, it develops, leases, operates, franchises and manages the properties. The chain, which is headquartered in Shanghai, started in 2001 and is China's number one economy hotel chain, with hotels in 50 cities and growing.

Home Inns is performing like gangbusters and rapidly expanding to keep up with the demand for low cost
accommodations. In 2006, it doubled its profit to a net income of $6 million, while at the same time nearly doubling its number of hotels to 134. Having all of those hotels means nothing if they are not full. Not a problem for Home Inns: its occupancy rate is 93%.

There is no question that others are jumping into the "We'll leave the light on" game in China. Locally-grown companies as well as foreign chains like Super 8 are making plays in the market. Can Home Inns stay ahead of the competition? I think so. As it pours its income into new hotels, and keeps those hotels filled, it is improving on margins and thus bettering its revenue per room. This is a bet -- and bed -- I'm willing to make.

Type of stock: A Chinese chain of budget hotels with a rapid expansion strategy matched with a terrific occupancy rate and ever growing demand.

Price target: Currently trading in the $35 range, I think this company's stock could see another upswing once China comes back. It has hit as high as $49.50 this year, and given its good financials, the rapidly growing marketplace, and its jumpstart on the competition, I can see this one as a double by next year.

Hilary Kramer is a financial editor and money coach for AOL and an authority on investing. Visit her at www.hilarykramer.com.

I've just returned from the World Money Show, where some 10,000+ investors gathered to learn about global investing. I had a chance to meet with many of the advisors who were featured at the show, and I have been highlighting some of their favorite investment ideas. To view all of the stocks featured in this special global report, click here.

"As it feverishly prepares for the 2008 Olympics -- the biggest coming out party for a country in history -- China appears ready to take its place in the global economic elite," notes international investing expert Nick Vardy.

The London-based money manager and editor of The Global Bull Market Alert sees opportunity in Shanghai-headquartered, Home Inns & Hotels Management (NASDAQ:HMIN).

He explains, "Operating exclusively in China's fast-growth markets, Home Inn has become China's top budget hotel chain virtually overnight. And with the Olympic games putting China firmly on the global tourism map, Home Inns also offers U.S. investors the best way to profit directly from the massive demand for hotel rooms in China by foreigners.

"Incorporated in 2002, Home Inns has a head start in China that gives the company a huge first-mover advantage in a sector with vast potential. Domestic Chinese travel jumped almost 75% from 1995 to 2004, with travel spending growing to $66.1 billion. Home Inns already operates 134 hotels across China, opening 27 hotels in the fourth quarter of 2006 alone.

"An additional 48 hotels are already under contract. With operations in 39 cities, and having its pick of prime, underserved markets with strong population and economic growth, Home Inns is particularly well-positioned to take advantage of China's potential moving ahead.

MAJOR PAPERS:

• The Wall Street Journal's (subscription required) "Heard on the Street" column wrote that activist investor Carl Icahn has his eyes set on WCI Communities Inc. (NYSE:WCI).
• The Financial Times (subscription required) reports that BAE Systems Plc. ADR (OTC:BAESY) faces a court challenge from anti-arms groups that want to know how private documents belonging to them ended up in the company's hands.

OTHER PAPERS:

• Aviation Week reported that Iran said it is set to attempt a space launch. There is speculation it could be a cover for Iran testing longer-range missile strike technologies.
• Investor's Business Daily's "New America" column focused on Home Inns & Hotels Management Inc. ADR (NASDAQ:HMIN), China's top budget hotel chain. The company went public in October and is in the midst of a building boom, leasing properties and adding franchises in fast growing cities across China.
• BusinessWeek's "Inside Wall Street" column highlighted three companies:
• The Gap Inc. (NYSE:GPS) recently hired Goldman Sachs Group Inc. (NYSE:GS) to explore strategic alternatives. With sales continuing to deteriorate this puts Goldman Sachs analyst Margaret Mager in an awkward position as she has a "Sell" recommendation on Gap.
• Louisiana-Pacific Corp. (NYSE:LPX) is up from $18 in September to $23.33 now, buoyed by rumors that it's a buyout target and by "signs of a bottoming" in homebuilding.
• Intelli-Check Inc.'s (AMEX:IDN) ID-Check technology has been ordered by the U.S. Defense Dept. and will be embedded in handheld computers used by the Pentagon Force Protection Agency.
  

Home Inns & Hotels Management (NASDAQ:HMIN) priced its 7.9 milion share priced its 7.9 milion share IPO at $13.80 per share, well above the $10 to $12 forecast. There were prior indications of a higher price and higher number of shares, but it is always easier to sell the same number of shares at a higher price than it is to bump up the share count. Credit Suisse and Merrill Lynch are the lead underwriters and Deutsche Bank was a listed co-manager.

Home Inns was founded in 2002 and began opening economy class hotels in 2003. As of the filing date, it had or expected to have approximately 82 hotels, 63 leased and self managed and another 19 franchised. The leased and self managed hotels account for roughly 98% of revenues. It has contracts for some 57 more units in the next year. Some 24 of those will be franchised, but it makes you wonder if they aren't better off going the lease and self-management route. It takes an upfront fee for a franchise plus 5%-6% of the sales at each franchise for the branding and the networking of the reservations and support systems. The franchise units sound a lot like Best Western on a much smaller scale, but maybe that isn't fair. You can click for a mapping of its hotel locations here.

The company isn't without risk. It has been sacrificing profits and cash flow for growth, and with all the rapid construction in China you can imagine a myriad of issues that could delay its growth plans and have a financial impact. SARS and bird flu scares could always come back up in China, or whatever the next pandemic scare happens to be. They could have power issues, building material shortages, building permit delays, accidents, and the like. They are also unproven as a long-term operating company and it isn't known how well their reservation and support network is running. There is also the factt hat since it leases rather than owns, it may have to suddenly choke up substantially higher rent costs down the road that could have the same effect as a fuel hedge expiring or a large balloon note coming due that wipes out all of a company's cash. Despite that, the deal had no troubles selling.

The company has been growing rapidly rather than focusing on profitability. The niche is right and the formula sounds right too. Now it is just up to the company to demonstrate that they can be profitable. This is the first IPO of its kind, and if this goes well you could see many more smaller hotel chains in China (or India for that matter) going public. It will not be surprising at all if this IPO trades even higher out of the chute since the share count wasn't boosted.