| Stock (Symbol) | Stock Price | |
Baidu.com (BIDU) |
$238 |
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| Data is as of | Expected to Report | Sector |
November 6, 2014 |
Feb 24 – Mar 2 |
Technology |
| Sharek’s Take | ||
China’s largest search engine  Baidu whipped qtrly profit estimates and had annual estimates increased for the 3rd straight qtr. The stock is very timely (it’s broken out to new highs) and has great upside to 2015’s Fair Value of $343. It’s really a Top 5 growth stock — and is now ranked #1 in my Power Rankings. The only negative is revenue grew 52% but profits increased only 27%, due to high investments in technology such as mobile. But on the bright side the rate of spending on R&D has slowed from 85% in 2014 Q2 of sales to 68% last qtr (2014 Q3). Sales were up 13% quarter-over-quarter, yet R&D only increased 5% QoQ — sales are growing faster than R&D. Baidu continues to be one fo the worlds premier long-term growth stocks, at 28x 2015 earnings estimates its undervalued, and could double in the next two years. |
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| One-Year Chart | ||
 The Est LTG of 38% is phenomenal — and BIDU has proven it can grow at that rate too. Note the stock broke out back in October. Volume was strong that week, and the stock’s gone higher since, both positive signs. BIDU beat the street by 23 cents the last 2 qtrs, if it does that this qtr it will have 46% profit growth. |
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| Earnings Table | ||
 As I mentioned earlier, sales popped 52% while profits grew 28%. Sales came in below views. BIDU beat the street by 23 cents for the 2nd consecutive qtr and has beaten by at least 20 cents every qtr in 2014. Annual Profit Estimates keep leaping higher. Right now it looks like profits will almost double in two years. Quarterly profit estimates show profit growth accelerating to into 2015. If BIDU beats — like it has — then 40% growth could lie ahead. |
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| Fair Value | ||
 Its clear and obvious to me this stock is worth 40 times earnings — and possibly more. My 2015 Fair Value is $343 and 2016’s is $468. This is also a great stock to buy-and-hold so BIDU could be even higher 3-to-5 years from now. |
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| Ten-Year Chart | ||
 I’ve owned BIDU since 2006, first buying in at $9 (after splits). The company used to get a 60 P/E, then for a while only a 20 P/E, now the P/E is back to 40. This is why you see the big dip in the stock in 2011/2012. Also, the ten-year shows BIDU to be a bit extended in a long-term view. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
6 of 25 |
Baidu put out a solid quarter. The only negative was profit growth could have been 40% if it weren’t for all the spending, and that’s getting better. This is the best looking research report of 2014 Q4 and right now I think BIDU has the best short-term outlook of any stock I follow. |
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Aggressive Growth Portfolio
6 of 12 |
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