Chinese Rocket Stocks Part II

When Baidu(BIDU Quote) took off on one of its runs early last month, the stock surge prompted me to write a column about Chinese Rocket Stocks.

At the time, Baidu's ascent was pegged to the release of a new online video game from Shanda Interactive(SNDA Quote). Did the reactive stock move make sense? Not necessarily. Baidu was hard to value at 60 times earnings.

Since that time, however, some things have changed. Baidu just a week ago announced that its second-quarter earnings and sales more than doubled, sending shares to another all-time high. Also, Citi Investment Research upgraded its rating of the stock to buy from hold and increased its price target to $250 from $218. Clearly, many believe these stocks are solid places to park your cash.

Still, investors are nervous about putting money in Chinese stocks. They are worried about bubbles. They are worried about China's government. They are worried about corruption. In other words, these companies that are spinning off a ton of cash and that sport excellent balance sheets and great growth prospects also have a solid of wall of worry built in.

That's why, in an effort to continue our earlier work, I set up a new list on Stockpickr.com, the Chinese Rocket Stocks Part II.

This time I took a look at some risky small-cap stocks as well as some more solid telecom plays, all of which are pegged off of China's growth. We tend to look at companies that have great growth, real earnings and business models that make sense.