Broad indexes are up 120% this year; the average IPO makes 192% in its first day; even blue chip stocks are nearly doubling every year; and there are more IPOs than ever before in history. Sound familiar? No, it's not the dot-com boom of 1999. Rather it's the manufacturing boom being seen in China right now... and it's the next big bubble.

Just how crazy has it become? Well, China Shenhua Energy recently IPO'd and rose 87% in its debut to which its chairman said he "was not totally satisfied". Low floats, spectacular valuations, investment restrictions, and a greedy market has made China the next big bubble and many say is approaching critical mass.

Bullish investors insist that the Chinese bubble differs greatly from the dot-com boom in the United States. After all, these companies are actually generating real profits with real businesses supported by a robust economy. However, bears are quick to point out that the valuations are still just as bad with some companies like Baidu trading at more than 70x earnings!

In the end, China is an extremely hot market that shares a lot in common with the dot-com boom of the 90s in the United States. Investors in this space should be careful to hedge their positions and limit their exposure as these valuations can come crashing down at any time. However, until then, the Chinese market indexes and ETFs - like FXI - are definitely worth watching!

A large Crown Crafts Inc. (NDAQ:CRWS) holder requested that the company form an independent committee to evaluate strategic alternatives to maximize shareholder value in a Schedule 13D/A filing made with the SEC. Shareholders are hoping that the activist can work to unlock value in shares that have remained stagnant for almost a year.

Wynnefield Partners, a 14.6% stockholder in the company, disclosed a letter to the company's board of directors outlining how it should proceed and their expectations with regards to governance and the creation and release of shareholder value. The hedge fund first demanded that the company take action to unlock shareholder value through a possible sale or merger.

"Crown Crafts Inc. should take prompt action to form a truly independent SAC and, consistent with this notion, employ a competent outside "arm's length" firm to undertake an analysis of all the options available to the Company," said general partner Nelson Obus. "This analysis must include a sale or merger of the Company to be undertaken in the event that adequate risk adjusted returns on invested capital for new initiatives can not be identified."

Secondly, the hedge fund demanded that the company immediately act to clean up its corporate governance: "We are also concerned about the governance of CRWS and, as Wynnefield articulated in the proxy materials, request that you promptly unstagger the Board, articulate and implement a succession plan for yourself and other senior executives and orient Board compensation away from cash and toward equity participation in the form of a combination of option grants at market and restricted stock."

The hedge fund insisted that if these demands were not met they may be forced into another proxy battle to make the changes themselves. Combined, these factors make CRWS a stock worth watching closely over the next few weeks!

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Denny's Corporation (NDAQ:DENN) may quickly become yet another activist target after a hedge fund disclosed a large stake and indicated it would like to have a talk with management, according to a Schedule 13D filing with the SEC. Shareholders are hoping that strong quarterly results earlier this month coupled with activist involvement will help reignite the struggling restaurant chain.

Olstein Capital Management, who owns a 9.5% stake in the company, indicated their belief that the stock is undervalued and that steps should be taken to increase the market valuation. To this end, Olstein plans to communicate with the company on alternatives for realizing the unrecognized value and provide suggestions for improving the company's financial strength.

Denny's reported strong earnings earlier this month with same-store sales rising 1.3% on stronger customer spending despite a decline in guest traffic. Income per customer at the casual dining chain increased 6% while guest count fell 4.5%in its 468 company restaurants and 1,071 franchised locations.

Denny's stock remains down over 10% so far in 2007 but has begun to mount a turnaround since September - helped substantially by purchasing by Olstein, which moved up the stock over 10% alone since Friday. Denny's stronger results combined with the involvement of an activist shareholder make DENN a stock worth watching!

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Costco Wholesale Corporation (NDAQ:COST) shares rallied more than ten percent today after the company announced stronger-than-expected fourth quarter earnings in a 8K filing with the SEC. Shareholders were cautious going into this quarters earnings after a disappointing hiccup in August; however, it appears that the bulk retailer has fully recovered this quarter.

Costco announced a 4.7% increase in net income from 75 cents per share last year to 83 cents per share this year. Meanwhile, this quarter's same-store sales - a key measure in retailing - rose five percent. The largest gain was seen internationally where the company saw a nine percent gain.

Interestingly, the latest quarter's results also included an eight cent charge reflecting a change from monthly membership revenues to daily membership revenues used for accounting purposes. This makes the jump in revenue even more impressive.

Costco's success took many investors by surprise given last quarter's dismal 2% same-store sales and the losses reported by many others in the industry including Target stores. The company has also surprised analysts in terms of same-store sales in May, June and July.

In the end, Costco continues to outperform despite a troubling economic environment. Whether or not this continues remains to be seen, but this is definitely a stock worth watching!

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Cadbury Schweppes (NYSE:CSG) announced today that it plans to spin-off its beverages group into a new company and abandon its efforts to auction the business off amid credit market concerns. The American beverages unit will become the world's third largest softdrink company with Dr. Pepper and 7-UP among its brands.

"While the board continues to be committed to the principle of maximizing share owner value, it does not believe current market conditions will facilitate an acceptable sale process in the foreseeable future. Accordingly, our focus is now on demerging our Americas Beverages business," said the company in a statement.

The move to spin-off comes after the company rejected a large offer from an investor consortium including Blackstone, Lion Capital and KKR because the firms wanted the seller to help with financing. Another consortium consisting of Bain Capital , TGP and Thomas Lee also failed at their attempts to purchase the drinks business from Cadbury.

Morgan Stanley and Goldman Sachs advised Cadbury to separate the business segments after evaluating the other offers. Given the fact that spin-offs tend to outperform the larger market during their first two years and the fact that this spin-off will create a major competitor in the softdrinks business - this stock is definitely one worth watching!

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VMWare Inc. (NYSE:VMW) shares closed above $100/share on Tuesday marking a new milestone in its short life as a public company. There is little doubt that the company is the leader in virtualization but many investors are concerned about the company's low float, which can exaggerate its price moves - in both directions!

The VMWare IPO shares several similarities with companies that went public during the dot-com boom. First, they kept the stock at a low float in order to spur large price movements and attract investors. Secondly, they were in a sector that was pumped up by cheerleaders who continued to talk up the stocks until the end. And finally, there was obviously a large valuation assigned to companies that simply couldn't be justified once growth slows.

VMWare is currently trading with a P/E of 156x, which would require it to grow substantially in order to be justified. According to Jon Ogg at 247WallSt, "The stock is trading anywhere from 3-times to 5-times the sales of the entire virtualization market industry-wide to 2010." Clearly, the stock is trading at a lofty valuation and a low float is helping to keep shorts away.

It is also interesting to note that EMC Corporation (NYSE:EMC) doesn't appear to share the enthusiam exhibited by VMWare shareholders. After all, the company owns 86% of VMWare and current valuations put the company's EV at $33.45 billion compared to EMC's EV of $45.7 billion. EMC shares only saw a 50% run-up following the spin-off announcement.

In the end, analysts will eventually be forced to bail on this stock but it could take awhile before reality kicks in. VMWare is definitely in a hot market, but the company's current valuation surpasses that of the industry itself. Despite any reasonable growth estimates, it is impossible to keep running. Combined, these factors make VMW a stock worth watching!

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Pershing Square's Bill Ackman changed his status in Borders Group (NYSE:BGP) from passive to active, according to a Schedule 13D filing with the SEC today. The stock surged over 3 percent in response as investors hope the famous activist investor will work to unlock value for shareholders.

Bill Ackman reportedly discussed corporate governance issues with board members upon request by Borders representatives. The activist investor also reported a slight increase in his stake in the company, but noted that he does not believe the discussions will constitute an attempt to change or influence control of the company.

Ackman is well known for his activist involvement in Wendy's, McDonalds, and Target, in which he worked to unlock value through spin-offs and other strategic transactions. The activist is famous for his occasionally harsh letters to management and board members expressing dissatisfaction.

Pershing Square now owns 6.9 million shares, or 11.7 percent, of the company compared to 6.8 million shares, or 11.6 percent of the company, reported in March. Clearly, the hedge fund has confidence in the company but has not yet decided to take a fully activist stance - opting to let management continue as they have in the past. Combined, these factors make BGP a stock worth watching!

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LDK Solar (NYSE:LDK) shares rose $3.95, or 10.53%, to $41.45 today after the solar wafer maker raised its revenue forecast and reiterated that it saw no problems in its inventory reporting. Investors jumped on the news sending shares up as much as 23 percent during today's session.

The news comes after LDK's stock plunged 45 percent off its 52-week high of $76.75 over the past four trading days due to a former executive that said the company had problems with its silicon inventories. The former financial controller had reportedly left the company over a dispute regarding the company's inventory controls, which sent shares in a downward spiral.

LDK now boosted its third quarter revenue outlook to a range of $140 million to $150 million from its earlier estimates of $115 million to $125 million. Preliminary data showed that it had exceeded its original forecasts and shipped about 75 megawatts of solar wafers during the third quarter, beating analyst estimates by a significant margin.

 "As we previously indicated, we believe that there is no merit in the allegations made about our inventory accounting practices, our business operations are normal and we continue making shipments to fulfill our customers' orders," Chief Executive Xiaofeng Peng said in a statement.

In the end, this is great news for shareholders but we will have to wait until LDK files its financials to get a good look at the inventory numbers. Sales numbers like these should mean that the company won't have to writedown any inventory assuming that they had too much when the controller left. And if there are no problems, this stock still has a lot of upside. Combined, these factors make LDK a stock worth watching!

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