This Friday’s a big day for Camelot Information Systems (CIS). Camelot reports earnings that day, and the news should tell where the stock is headed.
Camelot is an IT outsource, but it located in China instead of the more popular India. The company does most of its business inside China, most companies outsource for other countries.
The Chinese and Indian stock markets corrected months ago. Now the U.S. stock exchanges are breaking down and I think its time for the Chinese stocks to lead again. The reason is a lot of Chinese stocks are good growth stories. Profits and sales are rising fast — these companies fit-the-mold I look for. The only problem is the stocks were going down. That could change.
Recently two other Chinese outsourcers have reported earnings, VanceInfo Technologies (VIT) and HiSoft Technology International (HSFT). VIT had good results and HSFT missed by two cents. HSFT is down big on the news, but probably still a good stock. VIT is doing fine.
On Friday Camelot is going to determine a lot for this group — and for CIS stock. Above is a one-year chart of CIS from the last quarter of 2010. The stock is now $20 and is sitting on its 50-day moving average. During the last year the stock broke out at $11 and went to $28. Usually strong stocks like that give up 50% of the move higher. That middle ground is $19-$20.
What makes CIS intriguing is this; the Chinese outsourcing market is growing very fast — like the Indian market ten-years ago. So there’s good growth opportunity. So this correction might be a perfect time to get in — but a lot rides on Friday.
Disclosure: At the time of publication, clients of DavidSharek.com owned shares of CIS.