Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified

Baidu

(

BIDU

) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified Baidu as such a stock due to the following factors:

  • BIDU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $652.1 million.
  • BIDU has a PE ratio of 0.6.
  • BIDU is currently in the upper 30% of its 1-year range.
  • BIDU is in the upper 25% of its 20-day range.
  • BIDU is in the upper 35% of its 5-day range.
  • BIDU is currently trading above yesterday's high.
  • BIDU has experienced a gap between today's open and yesterday's close of 0.9%.

'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills.

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More details on BIDU:

Baidu, Inc. provides Internet search services in China and internationally. BIDU has a PE ratio of 0.6. Currently there are 12 analysts that rate Baidu a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Baidu has been 3.1 million shares per day over the past 30 days. Baidu has a market cap of $74.5 billion and is part of the technology sector and internet industry. Shares are down 6.9% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Baidu as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income, growth in earnings per share, solid stock price performance and largely solid financial position with reasonable debt levels by most measures. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 6.5%. Since the same quarter one year prior, revenues rose by 36.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Internet Software & Services industry average. The net income increased by 6.2% when compared to the same quarter one year prior, going from $473.77 million to $503.02 million.
  • BAIDU INC's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, BAIDU INC increased its bottom line by earning $6.01 versus $4.96 in the prior year. This year, the market expects an improvement in earnings ($44.90 versus $6.01).
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 33.22% over the past year, a rise that has exceeded that of the S&P 500 Index. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • Despite currently having a low debt-to-equity ratio of 0.50, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 3.08 is very high and demonstrates very strong liquidity.

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