A Great Opportunity Ahead?
Chinese stocks have been stuck in neutral the past few years. Now is the perfect time for a break out. Here is a stock that could lead the charge!
China is still not fully understood by most investors. Many believe China will have a hard landing, as they believe its days of high-flying growth are numbered. Others simply don’t trust the government. Some shy away from foreign risk. Whatever the reason, China presents a great opportunity for investors who are willing to take on some risk and I believe the reward will be quite exciting.
When I look at China, I see attractive valuations. In fact, while I was scouring the Financial Times recently, I noticed that China has one of the cheapest stock markets in the entire world. Mainland China was trading at just 7.1 times earnings compared to 18.6 times here in the U.S. Even Hong Kong stocks trading at 11.7 times earnings are a better value play than the U.S. Chinese stocks are dirt-cheap and they have been trading sideways for years.
I also see growth. The forecasted economic growth rate of China should be among the global leaders for at least the next decade. It has already averaged a 9% annual growth rate for past two decades. This is nearly 3 times the growth rate of developed countries and I expect this trend to continue.
Now one of my favorite growth plays in China right now is technology. Urbanization is a new economic development strategy of the China new government that is fueling the demand for technology services. Although the urbanization rate of China is at about 50% after a three-decade economic development, this is still very low compared to developed countries.
Qihoo 360 Technology Co., Ltd. (NASDAQ: QIHU) is a company worth a closer look. It provides high-quality Internet and mobile security products in China. Its products and services are supported by its cloud-based security technology.
Its core Internet and mobile security products include 360 Safe Guard and 360 Anti-virus 360 Mobile Safe, 360 Safe Browser, 360 Personal Start-up Page, 360 Application Store and 360 Safebox. The Company also provides advertising services by providing marketing opportunities on our websites and offers web games developed by third parties, provide Internet security services such as remote technical support to paying customers and provide other Internet value-added services.
Reasons to consider QIHU:
- As more of the Chinese population seeks Internet and mobile services they will utilize Qihoo’s services. This positive technology trend should help fuel its earnings growth.
- Its balance sheet is free from long-term debt placing it in solid financial condition.
- It is currently trading above its 50-day and 200 day moving averages.
Let’s take a look at my five-point stock inspection:
Financial Strength: Positive
Earnings Trend: Positive
It scores 4 out of 5!
Here is a look at how the stock has done:
Bottom line: China looks very attractive compared with both the developed countries and other emerging market countries like India, Russia, and Brazil. China should continue to benefit from high economic growth rate and thus rising incomes for next two decades. Even considering all of the risk associated with China, the promising rewards are far too attractive to ignore. For these reasons, China should be a great place to invest! And technology should be a great sector. Qihoo 360 (QIHU) is a good buy up to $90/share. My 12-month price target is $130, representing a 50% potential gain from current levels.
I created a special report on the 5 Chinese Stocks You Must Own Right Now! Go to FTM Daily today and reserve your copy! CLICK HERE