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JimVanMeerten (63.05)

Baidu -- You can't ignore a 600# gorilla

Recs

5

May 19, 2010 – Comments (5) | RELATED TICKERS: BIDU

Before you all jump on me and talk about the impossibility of sustained growth and the 59 times EPS ratio let me interject my reasoning. In China and the Asian continent in general Google and Baidu are not on a level playing field. Google just doesn't seem to know how to play ball in Asia. They are trying to use western rules in an eastern game and fail to realize all the referees are hometown Chinese boys.

The Chinese government will make sure Baidu succeeds in China no matter what. They have over 1/2 of the world's population and are doing much better than we are in Africa and the Middle East. Baidu even has a Japanese search engine: www.baidu.jp.

Everyday more and more analysts are initiating coverage of this stock and now even Value Line has picked up this stock and rates it #1 for timeliness.

I'll let other tell you all the negatives and I'll explain what the stock has going for it.

As I've said more and more firms are beginning to follow this stock with 21 already on board with 13 buy and 8 hold recommendations released. The numbers they project are all most too good to be true. They look for increases in sales of 66.70% this year and 51.70% next year. Even more aggressive EPS growth is forcasted with an EPS increase of 92.10% this year, 55.40% next year and a 5 year compounded growth rate of 44.89%. Presently trading around 69 they have a 74 to 78 price target. Total return for the past 3 years has been 466.7%!

There is a big investor sentiment on Motley Fool with the CAPS members voting that the stock will beat the market by a vote of 3,286 to 642 and the more experienced All Stars voting 857 to 178.

For technical coverage Barchart notes a price pull back lately but still has 10 of their 13 technical indicators signaling buy for a 72% technical buy signal. Even with the pull back the stock went up 13.92% in the last month and hit new highs in 8 of the last 20 trading sessions. It trades above its 20, 50 and 100 day moving averages at around 69.54 with a 50 day moving average of 63.61.

Here are the pros and cons:
Pros --
1 - High investor sentiment and more firms initiating coverage every week

2 -  China will control internet access to over 1/2 of the world's population -- I empathize CONTROL

3 - Baidu is a Chinese hometown boy Wall Street predicts high double digit growth in sales and earnings

4 -  Presently selling at 69 with Wall Street targets of 75 to 78 72%

5 -  Barchart technical buy signal

Cons --

59 times PE ratio

For those of you that subscribe to the bigger fool theory even you can see there is a lot of interest in this stock and a lot more fools are jumping on board every day. Don't bet the farm on this stock but don't ignore it either. Buy a little bit and put a moving stop loss at the 100 day moving average and you should be alright.

Jim Van Meerten is an investor who blogs on investing on Financial Tides and Barchart Portfolio Blogs. Please leave a comment below or email JimVanMeerten@gmail.com

Disclosure: No positions in BIDU at the time of publication

5 Comments – Post Your Own

#1) On May 19, 2010 at 6:09 PM, ChrisGraley (29.65) wrote:

You actually make money on these recommendations?

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#2) On May 19, 2010 at 6:27 PM, JimVanMeerten (63.05) wrote:

Chris --

 

I put my recommendation in two fund on Marletocracy

VMNHI -- 12 month return 57.93%

VMSPC -- 12 Month return 55.44%

S&P 500 -- 12 month return 25.78%

That's why I no longer work, I'm just a full time investor

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#3) On May 20, 2010 at 12:23 AM, ChrisGraley (29.65) wrote:

You seem to recommend momentum stocks well after the money was made. 

You recommend Baidu when China is about define what the word sucks means.

You had the big Auto suppliers recommendation post last month.

Before that, you've recommended, dry shippers, industrials, Whole Foods and just about every other overpriced company in a poor economy.

You've got a blog post just about every day, so I wouldn't brag about a couple of 60% moves in the last year in a game where the top players get 500% and 600% moves.

I know you no longer work, it's obvious in the companies that you recommend. 

Stop spamming here if you can't bring more to the table then posting info that's about 6 months too late.

I'm sorry to be mean, but I expect more from someone coming here to sell advice than a bunch of picks that are months behind the traders.

You don't come here to teach.

You don't have any productive input on other posts.

You are just here to sell your skills and in my opinion you don't have any skills. 

The whole purpose of this site is to help people make picks on their own and you seem to expect people here to pay you for picks that you copy off of analysts that are selling when they tell you to buy.

I get much better info for free than you can ever come up with on this very site.

I make most of my money on my investments. I don't have to work, but I still work every day. If I'm going to brag, it's not going to be the quote that "I don't work."

I have nothing against you trying to sell your services here, but the least you can do is to prove you are selling something of value.

When you start seeing recs on your posts, you will be moving in the right direction. 

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#4) On May 20, 2010 at 10:28 AM, gargamelme (< 20) wrote:

"They have over 1/2 of the world's population"... Geographer you are not.

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#5) On May 20, 2010 at 10:44 AM, JimVanMeerten (63.05) wrote:

Chris -- you have a right to your opinion but I have much to offer

1 - I do not "sell" anything -- I offer advice for free

2 -- I'm one of the top 100 authors on Seeking Alpha after posting for only 6 months

3 - I'm in the Marketocracy M100 which is an elite group picked by the editors of Marketocracy from over 100,000 portfolios

4 - In a Marketocracy funded research prioject my Marketocracy fund VHNHI ranked above the # 10 publically traded mutual fund over the last 5 yerar period

5 - I do not choose to have a Fool portfolio because the scoring can be manipulated -- someone who has 10 great pics gets a much lower score than someone who has 200 average pics and there are times you should accumulate cash -- that decision give you no score.

Carrying 200 average picks to get a high score only shows you know how to manipulate the scoring system but doesn't show you know anything about managing a real portfolio.

 

Have a nice day and enjoy playing your game

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