By Elyse Andrews, Editor of Cabot Wealth Advisory
From Cabot Wealth Advisory 10/30/10 Sign up for free Cabot Wealth Advisory e-newsletter
Recently, I read that the number of Internet users will surpass two billion—or about 30% of the world’s population—by the end of 2010. That’s according to a new report by the International Telecommunication Union.
In 2010 alone, there will be 226 million new Internet users, with the majority coming from developed countries. Regionally, 71% of people in developed countries are online, while only 21% of the population in developing countries, many of which are emerging markets, are online. Even more specifically, 65% of Europe is online, 55% of the Americas, 21.9% of Asia/Pacific regions and less than 10% of Africa.
That leaves a lot of room for growth!
And nowhere is that growth more evident than in China, where Baidu (BIDU), that country’s leading search engine, has taken off in 2010.
Baidu was first recommended by Cabot China & Emerging Markets Report in July 2009. This is part of what Editor Paul Goodwin had to say then:
“Baidu is the dominant Chinese-language search engine in China, with a market share that hit 65.8% in 2008. (Google was second with 22% and Chinese rival Sogou was a distant third with 2.9%. Yahoo! was an even more distant fourth.) It is now the third-largest search engine in the world. For a company incorporated in 2000 and limited almost entirely to operations within a single country, this is a remarkable record.
“Baidu has built its towering advantage over its powerful competitors by being both imitative and innovative. The imitative part of the Baidu strategy is its total adoption of Google’s paid keyword search as its revenue model. The company offers most of its services free of charge, and gets 99% of its revenue from online marketing services. Earnings, which turned positive in 2004, have been growing at an astonishing rate.
“Baidu’s future growth is expected to come from the growth of the Internet in China. Despite the controls and restrictions demanded by the Chinese government—mostly aimed at pornography and politically sensitive topics—the Chinese people are taking rapidly to life online. China now has more people online than any other country in the world (221 million in early 2008) and estimates put the growth rate at 18% per year, with a target of 490 million users by 2012. (We note that that’s more Internet users in China than there are people in the U.S.)”
And things have only gotten better since then. Paul’s subscribers bought the stock at a split-adjusted 32 and currently have profits of about 250%! You could buy the stock here and hope for the best, or you could check out Cabot China & Emerging Markets Report, the #1 newsletter for the last five years, for details on what Paul is recommending today.
Elyse Andrews
Editor of Cabot Wealth Advisory
Elyse Andrews edits Cabot Wealth Advisory, a free email newsletter that offers independent, no-nonsense investment advice on how to build long-lasting wealth written by Cabot's analysts and editors. Every Saturday, Elyse writes the Weekend Digest, which includes her column and a summary of Cabot Wealth Advisories that readers may have missed during the week. Elyse is also a regular contributor to The Iconoclast Investor, a blog for Cabot editors and readers to share their views and interact with each other.
By
Timothy Lutts, Chiel Investment Strategist and Editor of
Cabot Stock of the Month
From Cabot Wealth Advisory 4/9/10
Sign up for free Cabot Wealth Advisory e-newsletter
Today, I'd like to write about Google (GOOG) and
Baidu (BIDU).Google, of course, is the king of Internet search, with revenues of $24 billion.
Baidu is far less known in the U.S. But in China, it was the number one search company last year, serving perhaps 74% of the market. Google was #2.
Last month Google pulled out of China, after revelations of censorship, and government hacking of emails. The company's unofficial motto, remember, is "Don't be evil."
And that leaves virtually the entire Chinese Internet search market to Baidu! (Sogu was #3 last year, with a 3% market share, not a worry).
Is this a good investment opportunity? I think so.
Look at it this way.
Google, while still a youngster compared to U.S. technology graybeards like Microsoft and Intel, has grown slower as it's grown bigger. Revenues in 2009 grew only 9% (the company will do a little better this year as the global economy recovers).
But Baidu is still a young kid, with revenues of just $651 million. Last year it grew revenues 40%, and it's bound to grow much faster this year.
In my book, that makes Baidu a better investment. And the fact that Baidu is far less well known and respected (there's bigger potential buying pressures as investors discover the story) only adds to the attraction.
In fact, while more than 900 mutual funds own Google, just over 200 own Baidu.
Finally, consider the fact that China has more than 1.3 billion people, more than four times the U.S. As China gets richer, more and more of those people will be going online and using Baidu.
Conclusion, in the years ahead, Baidu will become huge!
Knowing that was just one of the reasons that Paul Goodwin, editor of Cabot China & Emerging Markets Report, recommended Baidu to his subscribers last July. Today, they're looking at profits of 95%. For more information on click here: Cabot China & Emerging Markets Report.
Cabot China & Emerging Markets Report: The #1 Financial Newsletter for Five Years One investment advisory is beating the market with incredible returns over the last five years. Hulbert Financial Digest ranks it #1 for performance during that time—up a huge 128% versus the market’s gain of 1.5%. And there’s more where that came from! Don’t miss out on the next five years of monster growth!
Join us today.
Timothy LuttsPresident, Chief Investment Strategist, Editor of Cabot Stock of the Month
Timothy Lutts heads one of America’s most respected independent investment advisory services, publishing eight newsletters to more than 165,000 subscribers around the world. Tim leads a dedicated team of professionals who serve individual investors with high-quality investment advice based on time-tested Cabot systems. Under his leadership, Cabot has been honored numerous times by both Timer Digest and the Hulbert Financial Digest as among the top investment newsletters in the industry. Tim also edits Cabot Stock of the Month.