Monday, August 30, 2010

China Google and Baidu Opportunity

Google Baidu
China Stock Opportunity Traded on the Nasdaq


First, the US market looks terrible right now trying to find some low-risk high-reward buy long or short sell trades right now. Short term the DJIA and SP500 still look down. Long term the indices could be up if the economy gets fixed and GDP starts increasing again. The US government has much work to do to fix the economy and until that happens I am still leaning to the short side and a very possible double dip recession.

In case you want to buy invest long, this week might be your chance with a company in China that’s traded on the Nasdaq.

China Google Disagreement Presents Opportunity for Baidu

China and Google as good and great as they both are have been having problems with each other for some time now. It’s really too bad no matter what the situation is. Google balked at the Chinese government's censorship of their search results, so searches on Google in China are now limited to categories that don't require the company to censor its results. Whether these two giants work together or not in the future, they should continue to be leading growers on their own in the current and future global economy.

For some this China Google situation is a disaster and for others it’s an opportunity. The opportunity is that the China based internet search giant Baidu is the big beneficiary of this squabble between China and Google. This has allowed Baidu to gain significant China market share now.

Baidu Fundamental Analysis

To start off with Baidu’s earnings growth have hit triple digits, up 112% and 133% in the last two quarters. Analysts expect that growth to continue, predicting strong earnings growth of 111% this year, and 54% in 2011. Baidu has a history of strong earnings, with a 3 to 5 year growth rate of 98%. Its earnings per share growth rate one of the strongest in the industry, and outperforming 99% of all other stocks in the entire market. Baidu's return on equity is currently 40%, well above the 17% minimum often seen in leading stocks. Baidu has caught the attention of professional investors. Mutual funds own about 28% of the shares, and the number of funds owning the stock has increased in the last quarter. Lastly Baidu is a member of the Investors Business Daily Top 100 showing it has what it takes to be a leading global stock performer.

Buy Long Baidu – Ticker BIDU

Buy Entry: 75.99 to 80.10

Stop-Loss: 70.00

Take Profit Areas: 89.22 to 92.23, 97.70 to 101.17, 108.31 to 112.06, 125.30 to 129.47. Very Possible Long-Term Hold

Baidu Company Profile

Baidu, Inc. provides Chinese and Japanese language Internet search services. Its search services enable users to find relevant information online, including Web pages, news, images, multimedia files, and blogs through the links provided on its Websites. The company also offers online community-based products and entertainment platforms; an instant messaging service; and a consumer-oriented e-commerce platform. In addition, it designs and delivers online marketing services and auction-based P4P services that enable its customers to reach users who search for information related to their products or services. The company serves online marketing customers consisting of small and medium sized enterprises, large domestic corporations, and Chinese divisions or subsidiaries of multinational corporations primarily operating in the medical, machinery, education, franchising, electronic products, e-commerce, ticketing, tourism, information technology, consumer products, real estate, entertainment, and financial services industries. It sells its online marketing services directly, as well as through its distribution network. The company was formerly known as Baidu.com, Inc. and changed its name to Baidu, Inc. in December 2008. Baidu, Inc. was founded in 2000 and is headquartered in Beijing, the People’s Republic of China.

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Click the Baidu stock chart below for a larger view.

Baidu Stock Chart

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