Today, I’m going to quasi-recommend a stock that has been correcting since last September.  I really admired Fuqi International (FUQI) as it roared from 3 in March 2009 to 33 in September, but I never found the right buy point for the stock.

The story is a good one, as Fuqi International is a Chinese jewelry company that sells mostly gold jewelry to wholesalers, who then retail it within China.  The appetite of Chinese consumers for gold is a long-standing taste, as many Chinese families regard gold as a suitable way to safeguard family wealth.  Buy when times are good; sell when times are bad.

Times have been quite good for Fuqi, which reported a 135% jump in earnings in Q3 on a 36% gain in revenues.  The after-tax profit margin was 14.8%.  The roster of institutional investors has climbed from 17 in Q2 to 46 at last count.

I don’t usually recommend stocks that are in downtrends, but I’ve always been fascinated by the Fuqi story.  With a P/E ratio of just 8, this looks like a great buy here, with two caveats.  First, the stock needs to find some support and build a credible base before it can begin to advance.  Second, the company’s Q4 earnings report (which hasn’t been scheduled yet) needs to show positive results.

If FUQI can stop falling and get support from a good earnings report, it can be a real powerhouse.  Just don’t forget the “if.”