NEW BULLISH Plays
China Agritech, Inc - CAGC - close 16.72 change +0.74 stop 15.23
China Agritech, Inc. (China Agritech) is a holding company. Through its subsidiaries, the Company manufactures and sells organic liquid compound fertilizers, organic granular compound fertilizers and related agricultural products in the People's Republic of China. Its direct and indirect subsidiaries include Anhui Agritech Development Co. Ltd. (Anhui Agritech), Agritech Fertilizer Limited (Beijing Agritech), China Tailong Holdings Company Limited (Tailong), Pacific Dragon Fertilizer Co. Ltd. (Pacific Dragon) and Xinjiang Agritech Agriculture Resources Co., Ltd (Xinjiang Agritech). The Company's main products include spray, water-flush, dip and granular fertilizer products and other customized, crop-specific fertilizers that are tailored to its customers' specific requirements. Its liquid fertilizer products can be applied on a widespread basis via spraying by machine or aircraft.
Target(s): 17.70, 18.35, 19.40
Key Support/Resistance Areas: 19.60, 18.50, 16.00, 15.35
Time Frame: 1 to 2 weeks
Why We Like It:
The agriculture space continues to garner much attention throughout the world as commodity and food prices are increasing at a rapid pace, mainly from emerging markets. CAGC is a Chinese company in this space and the stock is forming a nice cup and handle pattern. CAGC is finding support at its 20 and 200-day SMA's and I believe it will bounce higher with the broader markets in the coming days and weeks. I'm not looking to hit a home run with this trade but our targets range from +6% to +16% higher. All of them are achievable with broader market strength which I think we will see, at least over the next week or two. Our stop is below the recent swing low, the upward trend line from 7/20 and the aforementioned SMA's. More nimble traders may want to try to time an entry in the $16.25 area.
Suggested Position: Long CAGC stock at current levels
Options Traders: Buy October $17.00 CALL, current ask $1.65
Annotated daily chart:
Entry on August xx
Earnings 11/11/2010 (unconfirmed)
Average Daily Volume: 1.2 million
Listed on August 28, 2010