To OTC Journal Members: 
 

Imagine This

Short term my new China idea looks great right out of the gates. TPI (TIANYIN Pharma) got off to a pretty good start today. Pre open, TPI announced it would pay a $.025 dividend to shareholders of record on October 30, 2009. The dividend is no big deal, but it does demonstrate the company is profitable enough to send its valuable cash to shareholders. 

It was recommended in the weekend edition. TPI closed Friday at $3.60, and closed today at $3.82 for a net gain of 6%- on the first day. There could be ups and downs, but I believe this stock will be headed much higher.

A nice start with that one. However- here's the really big news. Imagine this:I'm getting close to my next super undervalued new idea. This is a situation where OTC Journal subscribers will have a competitive investing edge. The reason? No one knows or follows this idea yet. 

Now- Imagine This: Currently trading at about 5 times 2009 EPS (supre cheap), this company is both growing like a weed and has a business model that will garner a much higher multiple- especially when one considers the model- lots of recurring revenue.

I'll provide some preliminary information during the week. You'll love this idea. It will be a lot like NF Energy, which you should recall we started with at $.69. It traded to $2 in pretty short order, and generated a 190% return over several months.

The idea later this week will be a lot like that NF presentation while it was still sub $1- easy money for those that can react to the facts. NF has since done a 3 for 1 reverse split, and is now trading rather quietly in the $4.50 range. 

NF Energy is an adolescent idea. We started with it as a toddler at $.70, but still has a lot of growing to do. A child grows a lot from 1 year to 5, but there's still years of growth ahead for a 5 year old. That's where we are with NF. 

NF is destined to find its way to an upgraded listing and more institutional sponsorship. Be ahead of it. At the next stage of its development, it will have another growth spurt, and an expanded audience. 

Speaking of NF- today's news casts a whole new light on this idea, and I'm certain I'll be writing about this for some time to come. Check out today's news:
 

NF Energy (OTC BB: NFEC): To Russia With Love

Big news out of NF today. NFEC announced it received a $700,000 contract from a Russian Hydro Power Plant, with a follow on order of $2.9 million to follow.

This equates to $3.6 million in revenues, or about 14% of annual revenues. I believe this contract represents a far bigger piece of news than a 14% revenue increase. 

In case you're wondering or need a refresher course, NF Energy designs and manufactures gigantic valves used in hydro power plants. The technology saves an enormous amount of energy by making the the hydro electric power plant far more efficient. Using the NF valves, far less hydro energy is wasted, and energy is thereby saved.

To give you an idea of the scope of these valves, check out this image. This valve is about four times the size of the guy standing in front of it. Now, this guy might be 5'2" or 7'2"- I don't know. Either way, this thing is enormous, and it's a big mind boggling to visualize this valve controlling the water in a hydro power plant in order to turn a turbine and generate power.

We're not building power plants in the US. There's no increasing demand. All we can do is modernize some of our plants that run with older, inefficient technology.

However, in other parts of the world with gigantic emerging consumer classes, there is demand for infrastructure build out, and the Chinese are developing some highly efficient technologies.

Apparently, someone in Russia noticed NF makes some pretty cool gigantic valves, and they ordered. So, of far greater interest is the International nature of the order. Clearly, the company is diversifying its customer base. A company less dependent on a few clients is less risky and therefore more valuable. I'm hoping to see more of these kinds of orders.

As many of you have noted in emails, the volume of NF has dried up considerably since doing the reverse split, and the stock has slipped in value a bit. 

Looking at the chart, I don't see anything wrong with the stock coming back down a bit after the run it made earlier this year. Here is the split adjusted chart. 

I've drawn our Fib retracement lines back to my first coverage of the stock. As you can see, from July to late August this stock ran from $2.27 to $6.60. I'm taken out the ridiculous spike to $20- that was meaningless.

After a move of 190% in two months, this stock is entitled to come back and trade a bit sideways on lighter volume. It's just nature. It's storing up the energy to move higher. There's very little for sale. It's got a strong shareholder base.

There will be a catalytic event coming that will get this stock lit up again. It could be a huge contract, or an upgraded listing, or perhaps both. I don't know what it will be.

I do know the company has been willing to publicly forecast $24 million in revenues this year, which is 52% higher than last year, and probably lower than the actual numbers. After all, it's unlikely they will over forecast this number.

I'm looking for about $.48 per share in EPS this calendar year. Pretty soon, the market will start trying to figure out 2010 numbers, and start pricing those in. Can you think "wind components" in 2010. When investors start to figure that side out, this stock will have the wind at its back once again.

I believe we'll see new highs later this year, and another huge leg up next year as the energy saving type infrastructure build out in China gains momentum. The Chinese are committed to this, and they have the money. 

Here is the complete text of today's news for your review:
 

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