Despite an already strong run, Shanghai Ailu Package Co., Ltd. (SZSE:301062) shares have been powering on, with a gain of 26% in the last thirty days. Taking a wider view, although not as strong as the last month, the full year gain of 25% is also fairly reasonable.
Since its price has surged higher, given close to half the companies in China have price-to-earnings ratios (or “P/E’s”) below 36x, you may consider Shanghai Ailu Package as a stock to avoid entirely with its 63.6x P/E ratio. However, the P/E might be quite high for a reason and it requires further investigation to determine if it’s justified.
Shanghai Ailu Package certainly has been doing a good job lately as its earnings growth has been positive while most other companies have been seeing their earnings go backwards. The P/E is probably high because investors think the company will continue to navigate the broader market headwinds better than most. If…
