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Wednesday August 04, 2010
Technician sees breakout for Baidu (BIDU)
Leo Fasciocco, editor Ticker Tape Digest  Baidu (BIDU) is a Chinese-language Internet search provider, has been one of the strongest in the stock market for the past few years.The stock, which recently split 10-for-1, has broken out from a 12-week flat base today. We now rate BIDU as an excellent intermediate term play. The company conducts its operations in China principally through Baidu Online Network Technology (Beijing) Co., Ltd. BIDU offers a Chinese-language search platform; the company also launched a Japanese search service. This year, analysts forecast a 100% jump in net to $1.25 a share from 63 cents a year ago. The stock sells with a price-earnings ratio of 61. That would appear high, but is justified by BIDU's strong earnings growth. Going out to 2011, Wall Street expects net to climb 57% to $1.97 a share from the anticipated $1.25 in 2010. 
Net for the upcoming third quarter should climb 78% to 37 cents a share from 21 cents a year ago. The highest estimate on the Street is at 43 cents a share. The 12 month performance chart shows the stock appreciating 125% compared with a 20% gain for the S&P 500 index. The stock has done extremely well the past several years. BIDU's long-term chart shows the stock starting to trade in late 2005 at 8. The stock then soared to 40 by late 2007. It had major pull back during the 2008-2009 bear market. However, it has since turned higher and is in a strong up trend and poised to make an all-time high. The stock has been sensational. BIDU's daily chart shows the stock with a strong turn up from 40 earlier this year to a peak of 80. The stock then settled back and formed a new flat base bracketed between 68 and 78 roughly. The base is well structured. The stock had a breakpoint at 77.76 and another at the high at 81.92. We see BIDU having to push through a breakpoint zone to clear its base convincingly. The stock has done a lot of its basing work above its rising 50-day moving average line. So, it is still acting very strong as far as a trend pattern goes. The stock's momentum indicator is bullish. The accumulation - distribution line is in an overall up trend, although most recently it has flattened out a bit. Institutional sponsorship is excellent. The largest fund holder is 4-star rated T.Rowe Price Growth Stock Fund with a 1.5% stake. It was a recent seller of 41,300 shares. The second largest fund holder is Vanguard International Growth Fund with a 1.4% stake. It was a recent buyer of 173,200 shares. BIDU is a winner until proven otherwise. We are targeting BIDU for a move to 100. Learn more about this financial newsletter at Leo Fasciocco's Ticker Tape Digest. |
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