In the past few months I’ve felt that the blog has become a bit dry, so I’ve been thinking of ways I could create some more interesting posts.  I’ll  continue to provide a look at the overall market and provide watchlists of top stocks that have recently broken out, but I’d like to also take a closer look at individual stocks and how I’d trade them on a day to day basis.  From buy to sell and everything in between.  The first stock I’d like to take a look at is Focus Media Holdings (FMCN), currently the highest rated stock in my database.

Founded in 2003, Focus Media is the leading out of home audiovisual media network in China, reaching high income individuals in over 20,000 commercial buildings (airports, shopping malls, golf country clubs, retail stores) in 44 major cities.  On Jan 9^th , 06 Focus media acquired its largest competitor which makes them the dominant player in China’s office building advertising industry and has allowed them to raise advertising rates.  The buying didn’t stop there.  The company is moving into the mobile phone advertising industry in a big way with the acquisition of Dotad Media Holdings last month.  Dotad is  a leading mobile-phone advertising service provider in China that owns the largest WAP advertisement delivery platform through China Mobile and China Unicom and controls nearly 80% of this market.

Phillip Lin of the China Stock blog provides some thoughts on the Dotad acquisition.
http://chinastockblog.com/article/7491

This is a company expanding rapidly.  In the March ’04 quarter, FMCN posted sales of just 3.1 million.  A year later they more than tripled sales to 9.6 million and are on pace to triple sales again in the ’04 to ’05 period.  Earnings growth has been equally impressive by nearly tripling in the same time periods.

There are some valid concerns over government regulation and competition which readers of the China Stock Blog recently expressed in a post several days ago.
http://chinastockblog.com/article/8184

Since I’m a shorter term trader that relies (for the most part) on the action of the chart, I personally don’t concern myself much with how the company might be regulated or how the competition could steal market share a year or two from now.  While, a regulatory announcement could certainly hit the stock overnight, the likelihood of that anytime soon is remote.  What is of importance to me right now is that the company continues to post impressive growth and the chart continues to look outstanding.  Currently, I have FMCN as the highest rated stock in the world and it’s why I have a long position in it.   Let’s take a look at the chart.

After triping in price in less than a year following the IPO in summer of ’05, FMCN has traded fairly quietly in a channel to start of ’06 and recently broke out of that channel for the first time on March 31st with decent volume.  It stalled a bit at 60, but it didn’t take long for the stock to clear that source of minor psychological resistance.  Note this is where I initiated an entry in the stock.  Since that breakout the stock has formed a mini triangle pattern (always a bullish pattern), setting up the move for another surge higher.  As I write this post, the stock is breaking out from this mini consolidation this morning.  While the market is on shaky ground here, I’ll continue to hold the position as long as this pattern holds.