The Tycoon Report

The smart money asks “Do you Baidu?”

Do you Baidu?

This week, watch for a pullback in your favorite builders stocks, and for all you gold bugs out there, keep an eye on gold stocks as we see some very positive technical improvement in the underlying commodity. We continue to see great trades in the Internet and Chip sectors.

As predicted, last week was great for picking up new stocks and adding to existing positions on weakness. We continue to be overbought in here, and as such there is absolutely no need to chase stocks. One exception to that rule might be Baidu.com. See below for more.

If I were Robin Li (CEO of Baidu.com), I guess I would be pretty happy to watch my 26% stake in the company quadruple in a day. But after the first blush of billionairedom passed, odds are he was probably a tad bit upset with all of the money they left on the table.

After all, this deal priced at $27 opened at $66 and closed at $122.54!! Can you picture the bankers looking at each other scratching their heads like mentally impaired simians saying, “Gee I guessed we priced it too low?”

Baidu.com now has a four billion dollar market cap. Last year, it generated a little over thirteen million in revenue. Wouldn’t you love to get that market cap for your little thirteen million dollar company? But seriously folks, before you dismiss Baidu.com completely out of hand as an over-priced Internet junkie stock, think about this.

In 1996, a little company out of California went public with about a two billion dollar market cap. That year they would go on to do about 19 million dollars in revenue. Fast forward to present day, that company now generates over 3.5 billion dollars a year in revenue and boasts a market cap of over 48 billion dollars!! Of course the company I’m referring to is Yahoo.

If Baidu.com is China’s equivalent of Yahoo, then it’s cheap at twice the price. That’s a big if, but that’s what the stock market is all about.

Remember, let the game come to you!