Pages

Friday, July 2, 2010

BAIDU'S GREAT RUN IS IN DANGER


The market selloff is so strong, even Baidu (BIDU) has been stopped in its tracks…

China-based Baidu sports one of the greatest growth stories on the planet. It's the leading search-engine firm in China… enjoying a 60%-plus share of the market. We often say it's the "Google of China." And since the Chinese government recently told the real Google to take a hike, Baidu's story got even better. The company increased its earnings more than 150% in the most recent quarter.

This growth – and the story behind it – has made Baidu one of the stock market's biggest winners since the March 2009 bottom. Baidu has gained more than 500% since then. Even the January selloff this year couldn't budge Baidu… And it's now considered a "must own" growth stock.

But as you can see from today's chart, Baidu's incredible uptrend just ran into a rough patch. The stock has suffered several days of high-volume selling in the past few months… and its recent attempts to best its May high have failed. Plus, the stock is trading for more than 30 times next year's expected earnings. Despite the great story, Baidu's ugly chart and rich valuation mean danger ahead.

No comments:

THE MONEY MARKET

FRIENDS