Despite an already strong run, Shanghai Chicmax Cosmetic Co., Ltd. (HKG:2145) shares have been powering on, with a gain of 49% in the last thirty days. Looking back a bit further, it’s encouraging to see the stock is up 26% in the last year.
Since its price has surged higher, given close to half the companies in Hong Kong have price-to-earnings ratios (or “P/E’s”) below 10x, you may consider Shanghai Chicmax Cosmetic as a stock to avoid entirely with its 30.8x P/E ratio. Although, it’s not wise to just take the P/E at face value as there may be an explanation why it’s so lofty.
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Recent times have been advantageous for Shanghai Chicmax Cosmetic as its earnings have been rising faster than most other companies. It seems that many are expecting the strong earnings performance to persist, which has raised the P/E. You’d really hope so,…
