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Baidu is on a roll – where to from here?

Posted
1/10/2013 4:18:00 PM
By: Emerging Money
Referenced Stocks:

Track this call on Baidu ( BIDU , quote ) - hold or fold-em, good bad and ugly.

[caption id="attachment_61700" align="alignright" width="300" caption="Baidu campus, China"] Image courtesy of hwanghsuhui: http://commons.wikimedia.org/wiki/File:Baidu_Campus2.jpg [/caption]

The ambassador is on a roll. I wrote a backgrounder about Chinese internet stocks getting sold for the wrong reasons back on December fifth due to SEC concerns etc.

Fast forward to today and BIDU is now 18x the stock average, and 70x earnings for the previous five years.

This was an opportunity in Baidu which was 14x earnings then, or 25% ago.

Value multiple for a growth stock like Baidu Inc. ( BIDU , quote )  can be scary but this was overdone to the downside and we still want to be in the trade. So we rolled our 105 calls into 115 weekly next week but in the process took some 1/3 of premium out of the trade.

Watch tonight's Fast Money for the Ambassador's next move.