Chinese Rocket Stocks

Here are two of the stocks I found:

Netease(NTES Quote): This stock fits all of the criteria, and it's an online gaming company (like Shanda). The company has $438 million in net cash. So with a $2.2 billion market cap and $200 million in cash flow, it trades at only nine times cash flows. Analysts expect earnings to go to $1.23 per share in 2008 from $1.15 in 2007.

Analysts have not been correct often in the past. Netease beat analysts' expectations the past four quarters in a row, and if it beats again in 2008, then the forward P/E will be 13, or even lower, which is why it is first on my list of Chinese Rocket Stocks. Netease is also on an interesting portfolio of the companies of young billionaires.

CDC Corp.(CHINA Quote): This company runs China.com and sells enterprise software to companies in China as well as online games. The company has $247 million in net cash on a $961 million market cap. Analysts expect earnings to go to 57 cents a share in 2008 from 43 cents a share in 2007, giving it a forward P/E of 14, despite 30% growth. The company has met or beaten estimates four quarters in a row.

For the rest of the top 10 Chinese Rocket Stocks, including Sohu.com(SOHU Quote) and Ninetowns(NINE Quote), check out the China Rocket Stocks portfolio. The list includes some Chinese Internet companies that are so cheap they are almost trading with an enterprise value of $0, despite being profitable.