GEO Investing

If you have invested in U.S. listed Chinese stocks (ChinaHybrids) you are probably already aware of their rise and fall from grace. If you are thinking about investing in these stocks for the first time, it’s important that you become familiar with the evolution of the space. GeoInvesting has and will continue to play a big role in bringing awareness to the investment risks and opportunities in ChinaHybrids. I bought my first ChinaHybrid in 2004.

Last weekend, I had the pleasure of sitting down with Mike, the author of the Multibagger Monitor Substack. He can also be found on X under the handle @Mike10947310. I wanted to take the time to share some of the most valuable takeaways from that chat, because it wasn’t just about stocks—it was about strategy, discipline, and how to build an edge in an underfollowed corner of the market where information is still incredibly inefficient.

I guarantee you that Warren Buffett would be buying this stock if he found it in the beginning of his career, starting from a small capital base. Key reasons why I like this stock: it’s a cash-generating machine, an under-the-radar leading manufacturer that just made a move giving it a huge competitive advantage, has executed large share repurchases at higher and higher prices, invested tens of millions of dollars in expansions, is rapidly growing earnings per share, and is still trading at dirt-cheap multiples.

Despite a market backdrop still marked by caution, we continue to perform research, hoping to find some nice underappreciated gems during a time where there is less competition from investors who probably have thrown in the towel in the short term. But I’ll be ready to sell them the shares I’m buying on the dips when the crowd returns. 

Currently trading at a P/E of around 9.7x, we see clear room for this company to experience a re-rating due to growing earnings that are becoming more predictable. Public peers in this infrastructure industry typically trade at far higher valuations, often in the P/E of 15–20x range. Our target company has now significantly expanded its manufacturing footprint, positioned itself closer to key customer clusters, and cleaned up both its cost base and legal overhangs. 

This stock we are pitching today is dropping fast for the wrong reasons and now has a P/E of near 5x. This is despite being a growth company with the lowest risk it has had in years. However, we believe the P/E could eventually expand to over 20x, setting us up for a rare multibagger move of at least 300%.
Sometimes the best opportunities in microcap investing aren’t buried in futuristic tech or obscure biotech patents. Sometimes, they’re hiding in plain sight.