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3 Chinese Comeback Stocks to Buy

This trio of U.S. traded stocks has fallen too far


High-P/E China stocks have been hit particularly hard during the sell-off in the past few weeks. This is because of the large number of new, high-valuation Chinese Internet IPOs that took place since April.

Led by Renren (NASDAQ: RENN) and Qihoo 360 Technology (NYSE: QIHU), these new IPOs were priced at extremely high valuations. Many of these stocks have sold off 40% or more from the closing price on their first day of trading.

These new Chinese high-flying IPOs also cannibalized investor capital that supported other Chinese growth stocks. As a result, all high-P/E China stocks — regardless of quality — have been hard hit in the past few weeks.

China Stock to Buy #1 – SINA Corporation (SINA)

SINA Corporation (NASDAQ: SINA) has declined sharply in the past couple of weeks, leading the sell-off in Chinese Internet stocks. SINA recently disclosed that New-Wave Investment, a company controlled by SINA management and venture capitalists, plans to sell 1.25 million SINA shares.

The selling has been under way for several days now. I think this may be mainly Sequoia Capital taking profits. In addition, SINA management still owns a substantial stake in the company.

Judging by the market action — with the selling starting on June 3 and knocking SINA down from $125 to about $80 — the bulk of the selling is already over. Based on the trading volume, it was clear that a major holder is selling, but I did not expect this deep of a sell-off. This is a volatile name right now, but I think that the stock is currently oversold.

In addition, the company announced it would be launching an English-language microblog aimed at users abroad, entering a market dominated by U.S.-based Twitter. This is an interesting development that may lead to more users for the SINA’s Weibo platform.

China Stock to Buy #2 – 51Job, Inc. (JOBS)

51Job, Inc. (NASDAQ: JOBS) was mentioned in a negative research report regarding the human-resources and employment-services industry and the high valuation of companies in the sector. As a result, JOBS has sold off to the tune of 15%.

However, though the jobs market is certainly weak in the United States, the Chinese job market is much stronger. As a result, I remain long-term positive on this China stock.

China Stock to Buy #3 – Corporation Of China Limited (ACH)

Corporation Of China Limited (NYSE: ACH) rose recently on news that its parent company took control of five rare-earths producers in Jiangsu in an effort to boost its own production. ACH’s parent will now have an annual rare-earths production capacity of 34,700 tons. Since the announcement, the stock has been choppy.

Though I am still not sure whether the publicly listed entity will have any rare-earth assets, I believe these assets nevertheless will benefit ACH in the long run, and the parent company could inject some of the assets into the listed entity.

Article printed from InvestorPlace Media, http://investorplace.com/2011/06/china-stocks-to-buy-sina-jobs-ach/.

©2017 InvestorPlace Media, LLC