Small-Cap Stocks Could Be The Next Big Caps

Look at China Education Resources Inc. (OTCQB: CHNUF)

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On January 19, 2021, published Matt Krantz’s article titled “13 Small-Cap Stocks Are Poised To Be The Next Big Caps

In it, Krantz writes that “Small-cap stocks are on a tear. And it’s not too early to wonder which ones have the mojo to reach large-cap size, like those in the S&P 500 index.

Analysts forecast 13 stocks in the S&P SmallCap 600 Index, like materials company Cleveland-Cliffs (CLF), (STMP) and Crocs (CROX) will be worth $4.5 billion or more in 12 months, says an Investor’s Business Daily analysis of S&P Global Market Intelligence and MarketSmith. At that value, these companies would be larger than some big-cap stocks in the S&P 500 now. A few of the ‘small’ companies have already pulled across the $4.5 billion level.

Small-cap stocks are in the market’s driver seat. Eyes are on spotting the ones with big potential.”

The article cites that “‘We turned bullish on small caps in September and following the Russell 2000’s best quarter in history (since ’79), we still continue to prefer small caps over large caps for 2021,’ said Jill Hall, head of U.S. Small/Mid Cap Strategy at Bank of America (BAC).

What’s putting small-cap stocks on top? There are scores of reasons, Hall says. First of all, small stocks tend to do best when the economy is recovering from a downturn or expected to. Additionally, Hall says macroeconomic and political trends, like the Democratic sweep, are bullish for small companies.”

Krantz writes that “If a small-cap stock is growing, and if all goes well, it finds its way to the S&P 500 big leagues. Just think of Tesla (TSLA), which joined the S&P 500 in December and is now worth more than $780 billion. Just 10 years ago, the electric car maker was only worth $2 billion.

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And in January, Enphase Energy (ENPH) joined the S&P 500. Enphase is now worth $26 billion. Just a year ago, it was a midcap company only valued at less than $4 billion. The stock is up nearly 600% in 12 months.”

In light of the article, let us turn to another high growth area which has been benefitting tremendously from the pandemic: the Ed-Tech sector. In particular, let us consider the specific Ed-Tech value stock that is China Education Resources Inc. (“CHNUF”). CHNUF is perfectly poised to cater towards the intensified e-learning market demands which have arisen as a direct result of the COVID-19 pandemic. Based in Vancouver, Canada, CHNUF is a publicly-listed ed-tech company (TSX-V – CHN and OTCQB – CHNUF) with leading technology in intelligent system and contents. It provides online/offline learning, training courses, and social media for teachers, students and education professionals; these are all increasingly integral aspects of education in the contemporary era. CHNUF has 2 million kindergarten through twelfth-grade teachers registered through its web portal in China.

CHNUF’s online education platform and services provide a vertically blended learning, teaching, research and management system for a student-teacher-school-parent community. CHNUF’s products and services facilitate a significantly more efficient and enriched virtual educational experience for both teachers and students, most especially during a time when online education has become the backbone of many societies around the world. In combination with the circumstances and demands which have arisen as a result of the COVID-19 pandemic, we believe that China Education Resources’ numerous attributes will provide the Company with great long-term revenue potential.

CHNUF has 47,364,983 common shares outstanding. CHNUF generated US$9,390,402 revenue in 2019. CHNUF made US$978,466 net income in Q2 2020 (earnings per share $0.02).

China Education Resources Inc. (CHNUF) current price is $0.04 per share (P/S Ratio of 0.20, P/E Ratio of 2.0)

In comparison with CHNUF, the ratios of some larger education companies or organizations are as follows: *

1. Chegg, Inc. (CHGG)P/S Ratio of 22P/E Ratio of 5,375
2. New Oriental Education & Technology Group Inc. (EDU)P/S Ratio of 6.8P/E Ratio of 58
3. GSX Techedu Inc. (GSX)P/S Ratio of 84P/E Ratio of 700
4. TAL Education Group (TAL)P/S Ratio of 13P/E Ratio N/A
5. Genius Brands International, Inc. (GNUS)P/S Ratio of 42P/E Ratio N/A
6. Microsoft Corporation (MSFT)P/S Ratio of 11P/E Ratio of 35
7. NVIDIA Corporation (NVDA)P/S Ratio of 27P/E Ratio of 107
8. Zoom Video Communications, Inc. (ZM)P/S Ratio of 232P/E Ratio of 654
9. DocuSign, Inc. (DOCU)P/S Ratio of 40P/E Ratio N/A
10. Slack Technologies, Inc. (WORK)P/S Ratio of 19P/E Ratio N/A

(*Calculations are based on figures from Yahoo Finance as of Sept. 23, 2020)


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