GURE | Gulf Resources Surging After Shareholders Meeting

GURE Stock, Gulf Resources, Shares in the Nasdaq listed penny stock of Gulf Resources Inc. (GURE) found itself ending Monday’s session fifth among the big boards price percentage gainers. GURE stock traded as high as 1.63 in after-hours trading, half way to its 52 week high set back on February 21: 3.25. Ever since the Company’s annual shareholders meeting held last week on October 16, the volume spikes are the highest the bromine and crude salt products manufacturer has experienced since the 52 week high was set 8 months ago.

GURE is an must watch Nasdaq listed penny stock with a clear focus on their upcoming earnings.

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GURE Stock, Gulf ResourcesGURE Stock Chart

Market Cap: 54.26M
Close: 1.62, up 0.26 (19.12%)
Volume: 1,070,764
Est. Dollar Volume: $1,648,977
High: 1.64
Low: 1.41
Trades: 1,775
Average Trade Size: 603

Price/Sales (ttm): 0.38
Price/Book (mrq): 0.19
Book Value Per Share (mrq): 7.27

Authorized: 100,000,000
Issued and Outstanding: 34,745,342
Float: 21.19M
% Held by Insiders: 39.03%
% Held by Institutions: 7.50%

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Q2 financials were not exactly a ray of sunshine for the Chinese specialty chemical products focused Company. Gulf Resources, for the three months ended June 30, 2012, reported:

  • Revenue of $31.3 million, a year-over-year decrease of 39.0%
  • Gross profit of $9.9 million, a year-over-year decrease of 62.4%
  • Gross margin decreased to 31.6 % compared to 51.3% in Q2 of 2011
  • Income from operations was $7.6 million as compared to $13.4 million in Q2 of 2011
  • Operating margin was 24.3% compared to 26.1% for Q2 of 2011
  • Net income was $5.7 million or $0.16 per basic and diluted share, versus $10.0 million, or $0.29 per basic and diluted share a year ago, respectively
  • Cash totaled $72.04 million as of June 30, 2012
Wait, was that $72 million in cash? Yeah, it was and that is terrible considering they had $78.58 million in cash as of December 31, 2011. If you are wondering how they have been able to hoard so much cash, just look to the notes regarding their accounts receivables:
As of June 30, 2012 and December 31, 2011, allowance for doubtful accounts were nil. No allowances for doubtful accounts were charged to the income statement for the three-month and six-month periods ended June 30, 2012 and 2011.
So what the heck are they doing with it all — throwing lavish parties and giving away bromine for less than the market value?
Actually, although it isn’t part of the decrease in cash reported on the 10-Q for the second quarter, Gulf Resources’ wholly-owned subsidiary, Shouguang Yuxin Chemical Industry Co., Ltd., entered into a Commercial Property Purchase Agreement valued at $5.76 million on September 25 for the purchase of commercial buildings occupying 5,195.87 square meters (approximately 55,928 square feet) in Shouguang City, Shandong Province, P.R.C to replace the old leased office. Replacing a lease with a purchase — solid!
What you have with Gulf Resources is a cash rich company with total liabilities as of June 30, 2012 of just $14.91 million that doesn’t dilute its stock and has insiders who love to own GURE stock which is currently trading at:
  • 40.63% above the 50-day moving average: 1.15;
  • 13.91% above the 200-day moving average: 1.42;
  • -50.15% below the 52 week high: 3.25; and
  • 65.31% above the 52 week low: 0.98

About GURE Stock

Gulf Resources, Inc. manufactures and trades bromine and crude salt through its wholly-owned subsidiary, Shouguang City Haoyuan Chemical Company Limited , and manufactures chemical products for use in the oil industry and paper manufacturing industry through its wholly-owned subsidiary, Shouguang Yuxin Chemical Industry Co., Limited in The People’s Republic of China.

Click here to view the SEC filings for GURE.

Bottom Line: Things may have slown down in China, but the penny stock of Gulf Resources (GURE) received a swift kick in the “pigu” since closing its annual shareholders meeting. Add GURE stock to your list of big board long plays to watch since its obvious that the activity following immediately after the Company held its annual meeting has raised some eyebrows that were willing to pay 50% plus for the stock than it was prior to October 16th.

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