By Timothy Lutts, Chief Investment Strategist and Editor of Cabot Stock of the Month
From Cabot Wealth Advisory, 6/15/09 Sign up for free Cabot Wealth Advisory e-newsletter
While here in the U.S. we struggle to regain positive economic growth, this year China's economy will grow 8% ... maybe more.
Which means China is a great place to find growth companies!
One of my long-term favorites in the country is
Ctrip.com (CTRP), which has the country's biggest travel-related Web site. The company's revenues were $99 million in 2006, $160 million in 2007 and $215 million in 2008. Earnings were equally impressive.
The stock came public in 2003 and had a great run into 2008, with the stock's progress mirroring the company's. But when the global recession took hold, the stock plummeted from 71 to 16, par for the course for a fast-growing highly respected enterprise.
Today, with the economy back on the rails and expectations for Ctrip's growth once again healthy, the stock is working hard to recover lost ground.
In fact, a month ago, when the stock was trading at 38, Paul Goodwin,editor of Cabot China & Emerging Markets Report, made it his featured recommendation, writing, "At the heart of Ctrip.com's success is its excellent Web site. If you go to http://www.ctrip.com, you will arrive at a page that asks you to choose your language, with the choices being Mandarin, Cantonese and English. The layout is clean and easy to understand, with tie-ins to packages, car rentals and the company's award-winning call center. China has developed to the point at which it doesn't make a lot of sense to describe a company as "the Chinese Google" or the Chinese anything. But looking at this Web site, you can see why Ctrip.com was known for years as "the Chinese Expedia."
In the first quarter, the company saw revenues grow 21% to $58.6 million, while earnings climbed 19% to $0.32 per share.
After that report, the stock climbed as high as 48, but it's now pulled back to 42, and I think it's a decent buy here.
Editor's Note: Cabot China & Emerging Markets Report Editor Paul Goodwin is our in-house China expert ... let him be your guide to this profitable sector! Paul is the man behind Cabot China & Emerging Markets Report success! The report recently beat out 140 newsletters to be named the #1 newsletter for the past five years by Hulbert Financial Digest! The Report surged 22.2% for the five years ending May 31, 2009, trumping the -1.26% return for the DJ Wilshire 5000 during that time. Paul knows that the emerging markets are growing far faster than the U.S., providing ample opportunity to early investors. Don't let this opportunity pass you by.
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.