China Medical (CMED) - Back on Track; Valuation Should be Higher

After some perceived hiccups the last 2 quarters, which in retrospect proved to be a great buying opportunity as the market overreacted to a 90 day (quarterly) period of time, China Medical (CMED) appears to be back on track judging from yesterday's earnings. The stock has taken some lumps earlier this year, and the last time around a lower gross margin rate and higher tax rates raised some concerns. Some of those concerns seem to have been alleviated with yesterday's numbers. Even more interesting to me, is the subtle shift in revenue stream to diagnostic reagents versus medical equipment - we like to see this is any of our medical equipment stocks since "consumables" are reoccuring revenue (thinks razor blade versus razor).

• "We are pleased with the change in the Company's major source of revenues from selling medical equipment to selling diagnostic reagents which