I’ve heard from a lot of subscribers about the recent headlines concerning China and its ongoing economic boom despite slightly higher consumer inflation. So let me explain why I remain skeptical about most of the Chinese stocks that trade in the United States.

There is no doubt that the Chinese economy, which now stands to benefit from a fresh slate of market-friendly reforms coming out of Beijing, is improving. However, I don’t believe there are enough viable options for U.S. investors seeking exposure to this global market.  The fundamentals are surprisingly rich and likely to improve in the near term. Unfortunately, the valuations on most of these companies are even richer and unlikely to present a mathematically justifiable entry point for the foreseeable future.

For example, look at the widely-traded Chinese Internet group. The best established of the bunch, search engine Baidu (BIDU), has been bid up to a current P/E of 33, or about 13 times sales. Compare that to Google (GOOG), and you are paying a 13% “made in China” premium for every dollar in earnings and roughly double the price for the same revenue streams. Furthermore, while BIDU is growing three times as fast as its U.S. counterpart on the top line, its most recent earnings actually declined, raising concerns that the company has run into a cost wall. With no infinite growth curve to justify the valuation spread, the math in favor of BIDU breaks down.

Likewise, Youku Tudou (YOKU), the equivalent of Twitter (TWTR), fails to support the notion that Chinese companies are necessarily growing faster. While neither of these social networks are profitable, TWTR is expanding its audience and monetizing those users at a faster rate.

Beyond the Internet group, the once-hot solar stocks demonstrate what can happen when a chart that has been driven up to unsustainable levels by speculative interest finally springs a leak. Yingli Green Energy (YGE) is on my “avoid” list because the company has neither earnings nor impressive enough growth for us to invest our money.

Most of what’s left behind for U.S. investors trades at a multiple that is difficult to justify. In fact, while there are scattered exceptions, Chinese stocks have gotten too far ahead of China itself. Couple that with this still-emerging market’s penchant for extreme volatility, and you can understand my reluctance to recommend many of the most popular names. While I’ll continue to watch for emerging opportunities, I recommend sticking with stocks that have clearer growth potential at attractive valuations, like our newest names in GameChangers and Breakout Stocks.