Those holding Shanghai Yahong Moulding Co., Ltd. (SHSE:603159) shares would be relieved that the share price has rebounded 33% in the last thirty days, but it needs to keep going to repair the recent damage it has caused to investor portfolios. Unfortunately, the gains of the last month did little to right the losses of the last year with the stock still down 11% over that time.
After such a large jump in price, given close to half the companies in China have price-to-earnings ratios (or “P/E’s”) below 29x, you may consider Shanghai Yahong Moulding as a stock to avoid entirely with its 47.3x 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.
Shanghai Yahong Moulding has been doing a good job lately as it’s been growing earnings at a solid pace. One possibility is that the P/E is high because investors think this respectable earnings growth will be…
