By Paul Goodwin, Editor of Cabot China & Emerging Markets Report
From Cabot Wealth Advisory 8/1/11 Sign up for free Cabot Wealth Advisory e-newsletter
My stock pick today is a recommendation for your watch list.
I included Sina.com (SINA) in the portfolio of the Cabot China & Emerging Markets Report on October 1, 2010. SINA was trading at 51 then, and I was attracted by the company's consistent revenue and earnings growth and by the beautiful 10-month base the stock etched beginning in November 2009. There was a lot of value stored up in SINA, and when it broke out above its old resistance, I recommended buying it.
After taking profits twice, we finally sold our SINA holdings in early June, as the stock was correcting sharply on high volume.
I never really lost faith with Sina. com, but letting a correction eat your profit (especially when the Cabot China-Timer was flashing an emphatic warning signal) is a great way to turn a gain into a loss.
Since that sell in mid-June, SINA has bounced back well, and looks to be entering a new consolidation phase.
The big story for Sina. com is, of course, its Sina Weibo microblog service. Sina Weibo is the first really successful microblog service to be tolerated by the Chinese government. The Chinese authorities have been severe in banning the most successful U.S. services like Twitter, Facebook and YouTube because they fear that they have been used to coordinate protests and create unrest.
Sina Weibo is approved because Sina. com is a know quantity, a company that knows what content will and won't be tolerated and enforces the rules enthusiastically.
My feeling is that SINA is in the process of building potential value, and what I'm hoping for is a calm consolidation that tightens into a range between 105 and 115. If that happens, a break above recent resistance at 125 will be a proper buy signal.
Keep your eyes on this one. I will too.
And if you want continuing advice on Sina. com and other top Chinese or emerging markets stock that trades on U.S. exchanges, check out the Cabot China & Emerging Markets Report. Hulbert Financial Digest recently named it the #2 investment newsletter for five-year performance! With an annualized return of 17.2% for the five years ending June 30, Cabot China & Emerging Markets Report is stomping versus the Wilshire 5000's paltry 3.4% gain during that period. Click here to learn more!
By Elyse Andrews, Editor of Cabot Wealth Advisory
From Cabot Wealth Advisory 1/22/11 Sign up for free Cabot Wealth Advisory e-newsletter
One of my favorite stocks in Paul Goodwin’s Cabot China & Emerging Markets Report portfolio today is Sina Corp. (SINA), the most popular full-service Web portal in China. Paul wrote about the stock in late September, here’s what he said:
“If you haven’t heard of Sina.com, it’s not surprising, since it doesn’t make much effort to build traffic outside China. But for many Chinese, Sina.com is their preferred source for news, email (both free and premium), weather, games, e-commerce, streaming audio and video, community and affinity groups. It’s the default setting on more Chinese computers than any other.
“Sina monetizes all that traffic by selling banner, button and text-link advertising (which collectively contributed 64% of 2009 revenues), offering wireless value-added services (WVAS) such as news, financial information, sports, weather and jokes sent to mobile phones, plus dating services, games, quizzes, educational content, ring tones and screen savers (33% of last years sales) with 99% of revenue coming from within China.
“The company experienced four quarters of slowing earnings growth in 2009, but the most recent quarters have shown earnings up 48% and 45%. Revenue growth is also back on track after three quarters of declines, with 15% growth in Q1 2010 and 10% growth in Q2. Sina Corp.’s after tax profit margin was an admirable 27.9% in Q2.
“But Sina Corp. has always been a solid, well-run operation with strong revenue and earnings growth and profit margins well above 20%. So why is the company suddenly coming in for such enthusiastic support from investors?
“The answer is Sina Weibo, Sina Corp.’s new microblogging service that has mushroomed into an online phenomenon. Sina Weibo (we’re told that the name translates to “Sina microblog”) began beta testing in August 2009, and was up and fully operational by the end of last year. By early March 2010, the service had five million registered users, and had doubled that number by mid-May!
“Other microblog services have been in China for a long time, but Sina Weibo has some strong advantages. First, it has the built-in base of more than 400 million users of Sina.com and Sina’s WVAS customers to market its services. Second, it’s a Chinese service, which many Chinese users prefer, giving it a leg up over Twitter. Third, Sina.com’s long experience in monitoring and controlling content allowed it to step in when Twitter and Chinese services like Fanfou, Jiwai and Digu were banned by the government on suspicion that they had been used to spread messages during the ethnic violence in Xinjiang in July 2009.
“Sina Weibo imposes the same 140-character limit on messages as Twitter, but 140 Chinese characters can convey much more information than 140 English letters. Add to that the embedded photos, videos and lyrics that the service enables, plus the entertainment and sports stars who have signed on as star bloggers, and Sina Weibo has huge momentum going for it.”
Paul recommended the stock at 51 and since his subscribers bought it in early October, SINA has roared higher and is now trading around 80! The stock (and the market in general) took a hit this week. You could buy it here and hope for the best or you could read Paul’s latest thinking on this stock and others in the latest Cabot China & Emerging Markets Report. Learn more 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.