I am going to break another cardinal rule and that is add to a stock before earnings. There is a lot of risk going into any company's earnings report. One wrong sneeze by an executive in a conference call and the stock drops 30% instantly for no logical reason. However, I like this quasi monopoly Chinese company and the 'price action' has been very good of late. The stock has held up in a serious downturn in the markets, and continues to sit above the 50 day moving average (upper $78s). It is down nicely today to the low $79s (down 5%) on less than 100,000 shares and is sitting right above its support level.
Again, always a risk going into earnings season but the price action seems to tell us, things should be good. Here is an earlier pieces I wrote on New Oriental Education (EDU) for those new to the blog [Cutting Back on New Oriental Education & Technology (EDU)]. This is a very pricey stock, but it always has been. I am not sure what price you can put on a near monopoly in a country hungry for education. At some point in the future it will miss a quarter, investors will drive it down 30% for no good reason and it will provide a once every 5 year type of opportunity. But until then I will continue to stick with this name, and buy on the smaller dips.
Long New Oriental Education in fund and in personal account
