Though it only cites a couple of valuation metrics, BW believes investors should take a good look at:
Ctrip.com (CTRP) and Shanda Interactive (SNDA).
Why? Both companies have modest PE ratios, and PEGs (price-earnings ratio divided by the expected
annual profit growth of the company over the next five years) lower than that of the
US market. Currently, Shanda's PEG is 35% lower than that of the S&P 500.
BW also believes that Sina.com (SINA) is cheap partly due to concerns over government intervention. However, from a valuation standpoint, SINA costs half as much as the average S&P company on a PEG basis.
With China's economy growing 9.5% last year, Sina could easily boost
profits half as fast as the S&P 500.
What makes CTRP so compelling? Investors should be especially comfortable with CTRP, which
caters to the burgeoning China travel market. Its business model,
focused on the more profitable hotel business instead of lower-margin
airline tickets, closely resembles IAC's (IACI) Expedia.com and Hotels.com.