Sparton Corp (SPA) reported a small decrease in sales for the second quarter of fiscal 2011. In the midst of a dramatic turnaround, the company has focused on removing unprofitable contracts, leading to increased margins across the board.

Two new acquisitions should help boost the sales figure going forward and the backlog has increased for 5 consecutive quarters.

However, we have all heard this boom bust story regarding China before. Investors may see not hot penny stocks like returns in Chinese stocks, but history has shown us that it’s usually near the bottom when the media is calling for a crash. We are not saying to take a contrarian attitude and go long Chinese equities, but take the bad news with a grain of salt.