Trade Ideas: Baidu (BIDU)

If you are a long-term investor able to absorb a fair amount of volatility that is usually associated with Chinese stocks, then consider buying Baidu, Inc. (BIDU), the company often referred to as China’s Google. The stock of the leading Chinese search engine has been beaten up in recent months and shows 52-week losses of nearly 24%. This creates a scenario where based on the company’s relatively cheap valuations, it doesn’t look like the name that currently trades into oversold territory with an RSI value of 38.50, is too expensive. According to several Wall Street analysts, Baidu will start bouncing back on the bottom line next year. They see earnings per share increasing 27% in fiscal 2014 and at an average of 20% annually for the next five years. Also, Baidu’s trailing P/E ratios are now far below the multiple of 30x FY 2012 earnings estimates. The company’s t12 P/E currently stands at 18.45, while trailing earnings are $4.84 per share. Baidu, whose revenues are expected to rise by 35% in FY 2013, has a PEG of 0.89.

One look at the chart of the Baidu, Inc. indicates that we could see the ticker print the tape at $102, which is our 12-month target to the upside.

BIDU shares recently traded at $89.22, down $1.09, or 1.21%. They have traded in a 52-week range of $82.98 to $134.71.

Disclosure: No Position

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