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The Internet continues to be a very promising sector to invest in for the future. However, just about every China-related Internet stock has plunged recently. Below, I have detailed some of the stocks that might be at or close to a bottom, and worth investing in at these lower prices. Most of these companies have a very strong balance sheets and have been in business for awhile.
Shanda Games Limited (NASDAQ:GAME) is trading at $6.51. GAME is one of the leading online gaming companies in China. The 52-week high is $7.70. The 50-day moving average is $6.96 and the 200-day moving average is $6.34. GAME has earnings estimates of about 73 cents per share for 2011 and 80 cents for 2012. This puts the PE ratio at about 9. Compared to other Chinese Internet-related companies, these shares are cheap. Many Chinese companies in this sector have PE ratios that are significantly higher. These shares have dropped from recent highs of around $7.40.
E-Commerce China Dangdang (NYSE:DANG) shares are trading around $12.16. These shares have fallen from a 52-week high of $36.40. The 50-day moving average is $20.13. Dang has earnings estimates of about 9 cents per share for 2011 and 21 cents for 2012. This puts the PE ratio at sky high levels but in time, growing profits could make the PE ratio more reasonable. This stock has plunged from a recent high around $20, on concerns that insiders would soon be selling shares and due to the general market correction. These concerns seem overblown, but shorts have taken advantage of fear and a weak market and nearly cut the value of this company in half, in just a couple weeks or so. I think this is a good time to buy a little (in stages) for the long term, although there is no doubt it's too early to say if this company will turn into another Amazon.com (NASDAQ:AMZN).
Giant Interactive (NYSE:GA) is trading at $7.41. Giant Interactive is one of the leading online gaming companies in China. These shares have a 52-week trading range of $6.03 and $9.45. The 50-day moving average is $8.22 and the 200-day moving average is $7.17. GA earnings estimates are about 65 cents per share in 2011 and 73 cents for 2012. This puts the PE ratio at about 11 -- low for one of the leading online gaming companies. According to Yahoo Finance, GA has over $900 million in cash, which gives it plenty of money to invest in the development of new games and Internet sites. The balance sheet is extremely strong, with about $4.17 per share in cash. This stock was trading near new highs just recently of about $9.45 and has dropped to current levels. Looks like a good time to buy cheap again, especially on any dips to about $7.17 which appears to be a strong support level for this stock.
Perfect World Co., Ltd. (NASDAQ:PWRD) is trading at $19.14. PWRD is one of the leading online gaming companies in China. These shares have fallen from a 52-week high of $34.40. The 50-day moving average is $24.39 and the 200-day moving average is $24.47. PWRD earnings estimates are about $2.63 per share in 2011. This puts the PE ratio at about 8 -- very low for one of the leading online gaming companies. The balance sheet is extremely strong with almost $5 per share in cash. The substantial amount of cash they have on the balance sheet will allow them to invest in future high growth opportunities. These shares have been volatile, dropping from over $24 in just a couple weeks to about $20. It's a good time to start accumulating after the big decline.
Renren, Inc. (NYSE:RENN) is trading at $7.52. Renren is a social networking company in China. The 52-week high is $24. This company went public very recently. Due to this, it's hard to find accurate earnings estimates for the company. You can see the balance sheet data here. These shares have dropped from recent highs of around $14 to current levels, but they are still fairly rich if you consider the revenues generated by this company with the market capitalization. One analyst just set an $11 price target and estimates, "Renren will make 8 cents this year on sales of $125 million, rising to 16 cents next year on $200 million."
Qihoo 360 Technology (NYSE:QIHU) is trading at $21.03. QIHU is one of the leading providers of Internet security products in China. The 52-week high is $36.21. The 50-day moving average is $27.01 and the 200-day moving average is unavailable since this company recently went public. QIHU has earnings estimates of about 23 cents per share for 2011 and 44 cents for 2012. These shares have dropped from recent highs of around $27. I would wait to see if these shares have bottomed before considering an investment here.
Disclosure: I am long DANG.
Source: Chinese Internet Stocks Implode: Buying Opportunity?