There are approximately five weeks left in the current earnings season, and so far, nearly 80% of the companies that have announced earnings have produced better-than-expected results and beat analysts’ expectations. As you know, this has driven the global stock markets higher over the past two weeks.
And I wouldn’t be surprised to see this global stock market rally continue through Labor Day, as positive earnings and institutional investors buying back in should support the market nicely over the next month.
Considering that China remains the only economy to recover from the global economic crisis, posting a robust 7.9% GDP figure during the second quarter, I look for the leaders of this rally to remain stocks with solid earnings growth in the strongest economy in the world right now — China.
On average, I’m looking for our China stock recommendations to post year-over-year profit growth of more than 20%. And a select few Chinese companies may even report as much as a 40% increase from a year ago!
How is this possible? That’s easy — Chinese companies aren’t weighed down by a dismal economic outlook. The Chinese government’s stimulus package and the resulting economic growth in China is helping these companies overcome the global financial crisis and economic downturn.
One of my favorite companies along these lines is Baidu.com (BIDU), as its benefiting from the red-hot Internet industry in China and the economic recovery boosting advertising sales for the company.
>
Top China Stock to Buy Now
The Internet industry in China is simply booming! Last year, the country overtook the U.S. as the number-one Internet market in the world. Today, China has 338 million Chinese Internet users — the most in the world and more than the U.S. population of 307 million.
What’s interesting, though, is that China’s Internet penetration rate is only 25.5%. When you compare that with the U.S. penetration rate of about 75%, you can see why there are incredible opportunities for Chinese Internet companies today. And one of my favorites along these lines is Baidu.com (BIDU).
Commonly referred to as "China’s Google," Baidu has the majority market share in China’s Internet search market, claiming a 61.6% share. Google only has a 29% market share in China. Baidu has claimed such a strong lead over the competition because it has something they don’t — in-depth knowledge of Chinese culture, the country, language and heritage. That provides it with a natural advantage over foreign search engines.
As a result, the company’s business has been booming this year.
Baidu Reports Stellar Second-Quarter Earnings
On July 23, Baidu announced blow-out earnings with its second-quarter profit jumping nearly 45% and revenues surging about 37%. Because of China’s massive stimulus package, Baidu benefited greatly from a boost in retail spending.
In addition to posting solid results, the company also provided positive forward-looking guidance. Baidu expects revenues to increase 15% to 18% in the third quarter, which is much faster than market forecasts.
What’s more, during the second quarter, the company’s stock surged an incredible 100%! But considering the potential growth in China’s Internet market and the country’s rebounding economy, this could be a drop in the bucket of profits for 2009.
Investors that followed Robert Hsu’s advice ahead of earnings and were able to snatch up a quick 7% to 10% in just a matter of days. But it’s not too late; you can still take advantage of the opportunities in Baidu and other top-notch China stocks. Learn how to get started by click here.
