Baidu cashing in on China's Internet boom

September 1, 2009

Welcome to the first issue of Stock of the Week! This series is designed to bring you the information you need every week to make sound decisions for your portfolio. We’ll be covering a lot of ground each Tuesday, putting a number of companies and sectors through my rigorous research database. By comparing some of the most talked about stocks on Wall Street head-to-head, we’re going to uncover the good, the bad and the ugly about specific stocks in your portfolio.

We just came off of our most successful earning seasons in What’s Working on Wall Street Now’s history, and we’re going to use that momentum to dive right into our next round of market-beating stocks. Lancaster Colony (LANC) was our most profitable trade with a 20% run in one week, while American Dairy (ADY) came in second with a quick 11% gain in about seven days. There’s no denying the power of earnings season, and these instant gains are a testament to how profitable it can be to focus on quarterly reports.

In my 30 years of working with the markets and making stock recommendations, I’ve come to love the thrill of earnings season and the instant gratification from picking a stock that gaps up by double digits in just a few days. But earnings season only comes four times a year, and there’s a boatload of money to be made in the meantime if you know where to look.

That’s where my Stock of the Week comes in! Every Tuesday, I’m going to take your stock ideas (email them to me at stocks@navelliergrowth.com) and run them through my gauntlet of research so that you’ll know immediately if these picks are worth holding on to or if they are toxic to your portfolio. I’ll also match up some stocks side-by-side to give you real-world examples of what’s working in your stocks—and what’s not.

So without further ado, let’s get to our first Stock of the Week: Baidu.com (BIDU). Last week I asked you to email me the name of the company you most wanted to be researched, and this one came up at least a dozen times. Syed, for instance, wanted to know more about whether or not this stock is a good investment. Well, Syed, let’s take a look at the facts. This stock is basically the Chinese equivalent of Google (GOOG)—but as you can see from the chart below, Google is already fully grown while Baidu.com is just at the beginning of its tremendous growth curve!

Baidu.com (BIDU)                                         Google (GOOG)
Market Cap: $11.4 billion                             Market Cap: $145.42 billion
2Q Earnings: $1.61 per share                    2Q Earnings: $5.36 per share
2Q Surprise: +11.8%                                    2Q Surprise: +5.3%