e-Future Information Technology: A Four-Day Wonder?

e-Future Information Technology (EFUT), a Chinese software company, in four consecutive trading days climbed from a low of $10.52 to a high of $48.64. The next day, November 15, 2006, it dropped $18.75 from its high to close at $29.89. On November 16 EFUT closed up $4.46 at $34.35.

Its current price-to-earnings ratio (P/E) is 75, making EFUT richly priced. If you assigned the software services industry-wide P/E of around 29 to its $0.45 earnings per share, the stock should trade at $13.

Be very careful with this very speculative stock.

Posted November 16, 2006.