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 or Stephanie Link. 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 $405.7 million.
- BIDU has a PE ratio of 25.5.
- 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 1.2%.
'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. EXCLUSIVE OFFER: Get the inside scoop on opportunities in BIDU with the Ticky from Trade-Ideas. See the FREE profile for BIDU NOW at Trade-Ideas More details on BIDU: Baidu, Inc. provides Internet search services. BIDU has a PE ratio of 25.5. Currently there are 7 analysts that rate Baidu a buy, no analysts rate it a sell, and 6 rate it a hold. The average volume for Baidu has been 4.3 million shares per day over the past 30 days. Baidu has a market cap of $47.2 billion and is part of the technology sector and internet industry. Shares are up 34.6% year to date as of the close of trading on Tuesday. STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more. 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, expanding profit margins, largely solid financial position with reasonable debt levels by most measures, notable return on equity and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 22.5%. Since the same quarter one year prior, revenues rose by 43.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- BAIDU INC reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, BAIDU INC increased its bottom line by earning $4.78 versus $3.02 in the prior year. This year, the market expects an improvement in earnings ($4.98 versus $4.78).
- The gross profit margin for BAIDU INC is rather high; currently it is at 69.84%. Regardless of BIDU's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BIDU's net profit margin of 34.96% significantly outperformed against the industry.
- Despite currently having a low debt-to-equity ratio of 0.38, 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 3.99 is very high and demonstrates very strong liquidity.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Internet Software & Services industry and the overall market, BAIDU INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- You can view the full Baidu Ratings Report.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.