The goal here at the Stocks Under $20 portfolio is to find companies trading at cheap valuations with growth and catalysts ready to boost the share price going forward. International companies don’t always fit well into the ideal as cheap valuations and catalysts sometimes aren’t enough to get investors into markets that have seen accounting irregularities and fraud. China continues to offer some big growth stocks for investors willing to take on risk. My favorite, Bona Film Group, offers an exciting way to invest in China’s growing middle class and its new focus on Hollywood style blockbuster movies.

I highlighted Bona Film Group in a prior article for subscribers with the following catalysts:

Catalysts:

Strong third and fourth quarter coming with already impressive results of movies recorded

Strong 2015 blockbuster slate includes company’s most anticipated movie ever

Five film partnership with Fox International begins with Bride Wars

Partnership/Partial ownership by Fosun opens doors for better real estate and synergies

Theater segment growing and capitalizing on growing Chinese market

Shares of Bona Film Group were bought for the premium portfolio for $6.14 each. After reporting stellar third quarter earnings, shares of the company traded up 11% to $7.65 in after-hours trading. With that increase, my position is now up 24% since the September purchase. Despite the rise, the earnings report highlighted many of my catalysts and reasons for going long this Chinese name.

Third quarter revenue grew 186% to $100.0 million. Bona saw net income increase 152% in the third quarter. In the quarter, Bona distributed four films: “The Continent”, “The White Haired Witch”, “Pompeii”, and “Non-Stop”. “The Continent” was the highest grossing Bona movie of all time. In the quarter, revenue broke down as follows:

Film Distribution: $79.1 million

Investment/Production: $18.6 million

Movie Theater: $21.8 million

Talent Agency: $0.3 million

Operating profit for the quarter by segment was:

Film Distribution: $29.5 million, 78% of company total, 37% margin

Movie Theater: $12.7 million, 33% of company total, 58% margin

Investment/production had a loss on the quarter and the talent agency had high margins but represented less than 1% of the total for the quarter.

In the third quarter, Bona completed photography of several upcoming movies. This included “The Sword Master”, “The Man from Macau 2”, and “Emperor Holidays”.

The impressive third quarter follows a second quarter that saw revenue grow 59%. Net income grew 69% in the second quarter. That quarter was highlighted by the theatrical release of “Overheard 3” and “To Love Somebody”. The fourth quarter and 2015 slate continues to be strong for the company, as mentioned in the earlier article as well.

This article highlights how Bona’s summer box office led the Chinese market. The company had three of the top fourteen grossing movies during the summer theater period. “The Continent” came in fourth place with $100.1 million, which was Bona’s highest grossing movie ever for a Bona distributed film. “The White Haired Witch” grossed $61.9 million in the period. “Overheard 3” grossed $49.5 million, the best in the series. That same article highlighted fourth quarter releases “Blue Sky Bone”, “The Dead End” and the highly anticipated “The Taking of Tiger Mountain”.

Also earlier this week, Bona announced a new deal with IMAX Corporation to add three more theaters. This brings Bona’s backlog of IMAX theaters to four, including one in Beijing. The growth of the Chinese box office has helped boost IMAX as one of the leaders in the region with a strong backlog. In an article, I highlighted how IMAX’s exclusive partnership with Netflix on the upcoming “Crouching Tiger, Hidden Dragon: The Green Lantern” could boost the movie company. With four IMAX theaters open in time for the 08/25/15 release of the sequel, Bona could see a boost from the movie in its movie theater business segment.

Bona ended the third quarter with 22 theaters in China. The company had a backlog of 20 theaters at the end of the second quarter and many of those have yet to be added to the company’s existing total. The additional IMAX theaters have yet to be factored in as well. As mentioned in my prior article, China is rapidly growing its movie theater and screen count at a rate of 12 screens per day. The Chinese box office is on pace for $5 billion in 2014.

The upcoming slate of movies from Bona is incredibly strong, led by “The Taking of Tiger Mountain”, which Bona believes will break company box office records. Considering “The Continent” just broke the $100 million mark and had this big of an impact on Bona’s earnings and share price, consider what another $100 million or more movie could do in a future quarter.

In September I said shares were undervalued, considering the catalysts and the fact that the company IPOd at $8.50 a share. My recommendation was to buy shares with a price target of $8 by the end of 2014. I also said shares would hit double digits in 2015. Those two targets remain and I think investors still have a good opportunity to get in before this stock takes off.