2. Baidu, Inc. ( BIDU): Sell. China-based Baidu could be losing market share despite a lack of competition from search giant Google, Inc. (GOOG). Qihoo 360 ( QIHU) is gaining market share in search. A Citigroup analyst forecast paid click declined in growth in the final quarter of 2012. In 2012, paid click grew 64%, but Muzhi Li, an analyst at the bank, thinks growth dropped to around 20% in Q4/2012. 3. Nuance Communications, Inc. ( NUAN): Sell. Nuance shares are up around 10% from a 52-week low reached after the company reported a weak quarter and lowered its forecast for multiple quarters. Investors were previously enamored the company’s association with Apple in powering Siri. Unfortunately, the licensing does not bring in big revenues for Nuance, though it mostly exposes the company to greater brand recognition. According to Kapitall’s Company Snapshot tool, the price of profit (or forward P/E) for Nuance is 17.
4. Stratasys Inc. ( SSYS): Sell. 3D Printer maker Stratasys was mentioned unfavorably by Cramer. Competitor ExOne (XONE) issued strong guidance for 2013. ExOne expects revenue to be as high as $52 million, while gross margin will be between 42%-46%. More recently, Charles Hull, a co-founder of Stratasys, sold more than half of his position.
3D printing has a bright future, but investors assigned a high POP (price of profit) on companies like ExOne and 3D Systems ( DDD). Stratasys is valued at 13 times sales.