3 Chinese Internet Stocks Whose Momentum May Be Coming Back

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 |  Includes: BIDU, SINA, SOHU
by: BubbleBustInvesting

Those who thought that Chinese Internet stocks were finished off may have been wrong. That’s the message from Thursday’s earnings and sales report of Baidu (NASDAQ:BIDU). The report beat analysts’ estimates, sending Baidu's shares sharply higher.

Baidu’s robust earnings report suggests that the momentum may be coming back for Chinese companies, as was the case with American internet stocks like Amazon.com (NASDAQ:AMZN), Salesforce.com (CRM), WebMed Health (WBMD), and Ariba (ARBA). Baidu, in particular, may be turning into a Chinese Google as it enjoys a sustainable competitive advantage in the internet search services in China and Japan—in fact, the charts of the two companies look similar.

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Long-term investors may want to take a close look to two other companies, Sina, and Sohu.com that display solid fundamentals and are trading at a reasonable price.

Company*

Business

Forward PE (Dec. 2012

Operating Margins

Baidu, Inc. (BIDU)

Internet search engine

27

52.18 (%)

Sina Corp (SINA)

Media and mobile value-added services

46

17.32

E-Commerce China Dangdang Inc. (DANG)

Business –to-Consumer e-Commerce

492

0.32

Renren Inc (RENN)

Social Networking

137.25

5.42

Youku (YOKU)

Internet TV

902.5

-20.41

Sohu.com Inc. (SOHU)

Brand advertising, on-line gaming

9.45

37.50

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Source: Yahoo.finance.com

*These statistics should be interpreted with caution, as Chinese accounting standards are different than those of the U.S. So they aren't comparable with those of their U.S. counterparts like Amazon.com (AMZN) and Google (GOOG).

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.