Summary
- The recent rise in Chinese stocks, including Baidu, is driven by depressed valuations due to geopolitical concerns, not improving fundamentals.
- Baidu's technical indicators show strong momentum, with a 34.07% increase in the last month and a Trend Seeker buy signal.
- Baidu's fundamentals include a P/E of 11.30, expected revenue growth of 2.00% this year, and mixed analyst ratings.
- Despite its volatility, Baidu is monitored by 178,260 investors on Seeking Alpha and has a consensus price target of $131, an 18% increase.
Author's Personal View: The recent rise in the price of many of the Chinese stocks is not so much on improving fundamentals (as you will see in Baidu BIDU) as much as the fact that the fair value of Chinese stocks has been depressed by geo/political concerns. US stocks are traded at approximately an 18.6 P/E and many of the large Chinese stocks are trading at much lower P/Es. When Chinese stocks attain an equal P/E as other developed nations, analysts will return to looking at the individual stock's fundamentals.
The Chart of the Day belongs to the Chinese "Google" Baidu (BIDU) . I found the stock by using Barchart's powerful screening functions to find stocks with the highest technical buy signals, highest Weighted Alpha, superior current momentum and having a Trend Seeker buy signal then used the Flipchart feature to review the charts for consistent price appreciation. Since the Trend Seeker signaled a buy on 9/24 the stock gained 16.51.
Baidu, Inc. engages in the provision of internet search services in China. It operates through two segments: Baidu Core and iQIYI. The company offers Baidu App to access search, feed, and other services using mobile devices; Baidu Search to access its search and other services; Baidu Feed that provides users with personalized timeline based on their demographics and interests; Baidu Health that helps users to find the doctor and hospital for healthcare needs; and Haokan, a short video app. It also provides Baidu Knows, an online community where users can ask questions to other users; Baidu Wiki; Baidu Experience; Baidu Post; ERNIE Bot, conversational AI bot; Baidu Wenku; Baidu Maps, a voice-enabled mobile app that provides travel-related services; Baidu Drive; Baijiahao; and DuerOS, a smart assistant platform. In addition, it offers online marketing services, which include pay for performance, an auction-based services that allow customers to bid for priority placement of paid sponsored links and reach users who search for information related to their products or services; other marketing services that include display-based marketing services and other online marketing services based on performance criteria other than cost per click; mobile ecosystem, a portfolio of apps, including Baidu App, Haokan, and Baidu Post; various cloud services and solutions, such as platform as a service, software as a service, and infrastructure as a service; self-driving services, including maps, automated valet parking, navigation pilot, electric vehicles, and robotaxi fleets, as well as Xiaodu smart devices. Further, the company provides iQIYI, an online entertainment service, including original and licensed content; other video content and membership; and online advertising services. It has strategic partnership with Zhejiang Geely Holding Group. The company was formerly known as Baidu.com, Inc. Baidu, Inc. was incorporated in 2000 and is headquartered in Beijing, China.
Barchart's Opinion Trading systems are listed below. Please note that the Barchart Opinion indicators are updated live during the session every 20 minutes and can therefore change during the day as the market fluctuates. The indicator numbers shown below therefore may not match what you see live on the Barchart.com website when you read this report.
Barchart Technical Indicators:
- 24% technical buy signals
- 8.74- Weighted Alpha
- 13.57% loss in the last year
- .49 - 60 month Beta
- Trend Seeker buy signal
- Above its 20, 50 and 100 day moving averages
- 13 new highs and up 34.07% in the last month
- Relative Strength Index 72.65%
- Technical support level at $109.27
- Recently traded at $110.61 with 50 day moving average of $88.92
Fundamental Factors:
- Market Cap $38.73 billion
- P/E 11.30
- Revenue expected to grow 2.00% this year and another 5.50% next year
- Earnings are estimated to increase .50% this year, increase .30% next year and continue to compound at an annual rate of .98% for the next 5 years
Analysts and Investor Sentiment -- I don't buy stocks because everyone else is buying but I do realize that if major firms and investors are dumping a stock it's hard to make money swimming against the tide:
- Wall Street analyst gave 24 strong buy, 5 buy, 7 hold and 1 sell opinion on the stock
- Analysts' price targets are between $82 and $208 with a consensus of $131 about an 18% increase
- Value Line gives the stock its lowest rating of 5 (Value Line rates stocks more on fundamental than technical factors)
- CFRAs Market scope rates the stock a hold with a lower price target of $100 and comments:"Our Hold rating reflects our view of valuation and stable fundamentals, partly offset by geopolitical/regulatory concerns."
- MorningStar gives the stock its above average rating of 4 with a Fair Value of $157 or 29%under valued
- 178,260 investors monitor the stock on Seeking Alpha
Additional disclosure: The Barchart Chart of the Day highlights stocks that are experiencing exceptional current price appreciation. They are not intended to be buy recommendations as these stocks are extremely volatile and speculative. Should you decide to add one of these stocks to your investment portfolio it is highly suggested you follow a predetermined diversification and moving stop loss discipline that is consistent with your personal investment risk tolerance and reevaluate your stop losses at least on a weekly basis.
On the date of publication, Jim Van Meerten did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
