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Summary
- RETO stocks grew by more than 400 per cent in the last six months, riding on lucrative deals.
- ATIF stocks surged over 70 per cent in the same period, driven by SPAC growth in North America.
- Both stocks offer promising growth prospects as these sectors are likely to grow further.
Chinese companies ReTo Eco-Solutions Inc. (NASDAQ:RETO) and ATIF Holdings Limited (NASDAQ:ATIF) have been drawing considerable investor interests of late. While the former specializes in eco-friendly construction materials and waste management, the latter is a fast-growing consulting firm.
These stocks were trading in high volumes over the past couple of weeks, some 1.9 million ReTo stocks and 5 million ATIF stocks were traded in the past 10 days, reflective of the bullish sentiment.
Significantly, though, there is obvious tell-tale signs of the improving domestic business environment and encouraging government policies that are catapulting them into the international limelight.
The Chinese government has been pushing for a green economy after decades of coal and -fossil fuel-based growth as they celebrate the 100 years of the founding of the Communist party.
Given the tremendous growth opportunities as China moves into the next phase of development, these two growth stocks can be of great value in the future.
Let us look at why these two penny stocks have been on investors’ radar.
©Kalkine Group 2021
ReTo Eco-Solutions Inc. (NASDAQ:RETO)
This Chinese construction company manufactures eco-friendly building materials and equipment. Among its expertise include design and implementation of urban waste management and rainwater harvesting projects across different geographies such as the Middle East, Africa, and the Maldives.
ReTo stocks were priced at C$3.519 at 9:48 am ET on Monday, which was an increase of 198 per cent, and around 41 million shares were traded at the time. Its share value rose by 170 per cent in the past five days and over 400 per cent in the last six months.
With a market cap of $84 million, the company has made rapid strides in the Chinese market. It has recently bagged a prized government contract to build a state-of-the-art wastewater treatment plant at the Beijing Winter Olympics complex. The plant will provide wastewater treatment solutions to two Olympic competition zones in Yanqing and Chongli districts.
However, because of the COVID-19 pandemic, the company’s revenues had reduced by 350 per cent in the first half of 2020. In its financial results for the first six months of last year, ReTo Inc. reported revenues of $3.14 million, compared to $14.13 million in the same period in the previous year.
But with the gradual improvement in the COVID situation and the opening-up of the economy, the prospects for ReTo are brightening up. It also has a low debt-to-equity (D/E) ratio of 0.46.
ATIF Holdings Limited (NASDAQ:ATIF)
This financial consulting firm has also benefitted from the opening-up of the Chinese economy. Its stocks were priced at $2.04 per share at 9:50 am ET on Monday, which was an increase of 31 per cent from the previous close, and some 15 million shares were traded at the time.
This stock has also seen significant gains over the past few weeks. It rose by 44 per cent in the past five days and ticked up by over 70 per cent in the last six months.
The company’s financial advisory business has been growing since the easing of the COVID restrictions. ATIF provides financial consultancy services to small-and-medium-sized enterprises, and various IPO services, among others. The company also has clients from the advertising and event management world, as well as movie theatre companies in Asia and North America.
ATIF holds a market cap of 95 million and a debit to equity (D/E) ratio of 0.25. It had recently set up a special purpose acquisition company (SPAC) to expand its businesses through the acquisition of fast-growing firms and to raise funds through IPOs. SPACs have become popular off late, especially in the US, where they have raised some $83 billion worth of revenues from over 400 counts in 2020, representing a 513 per cent growth year-over-year growth.
The above constitutes a preliminary view and any interest in stocks should be evaluated further from investment point of view.
