China is ‘Uninvestable’? Not When This Tech Stock Has a 100% Profit Potential
Last year, some analysts condemned Chinese stocks listed on U.S. exchanges as ‘uninvestible.’ But I didn’t buy that claim.
Yes, Chinese regulators had sent a clear message to those companies: You can’t do anything we don’t want you to do. You can’t share data with anyone we don’t want you to. And if you do, there will be consequences.
DiDi Global Inc, a Chinese ride-sharing company that IPOed in 2021, learned that the hard way. Its struggles with the Chinese regulators pushed the entire Chinese tech sector, including companies consistently hitting it out the park, lower and lower.
But there is too much potential in these companies for investors like us to just ignore them. I have been watching Chinese stocks for some time, looking for some bottom, some support, so we could go bottom fishing for quality companies.
And now, I think, is the time to do just that – and potentially make a 100% profit.
Click the video below to watch my analysis of one of my favorite Chinese tech stocks and how to play it, or or scroll down to read the transcript.
Thanks for watching,
04/05/2022 Take It to the Bank Tuesday Transcript
What’s hot? How about Chinese tech stocks. We know what happened. The whole array of Chinese tech stocks that were just killer, hitting it out of the park, got absolutely slammed when Didi, the Chinese Uber, came public in the U.S. and got absolutely hammered because regulators in China said, “Not so fast. Who said you could do this? And by the way, we didn’t tell you what you could do with your data. And we want this and we want that. And no, you don’t do what we don’t let you do. You do what we tell you, you can do.” And it got hammered. And then so did everybody else, because that was the message.
It was very clear – clear as day – that Chinese regulators were saying, and officials were saying, “you don’t do anything that we don’t allow you to do. Who do you think you are?” And bam!
According to some analysts, Chinese stocks (tech stocks, in particular) became uninvestable.
I didn’t buy that. I was always looking for some bottom, some support, some place where they were gonna consolidate and make them an opportunity at least to go bottom fishing and try and get in on some kind of a low. Well, I think we’re there. Why? Because they got absolutely hammered. Case in point, Baidu (BIDU).
Baidu is the Chinese Google, people. Vastly profitable. It’s got twice as much cash as debt. Hitting it out of the park, but just got hammered. The stock was $354 and change back in February 22, 2021. On March… Are you ready for this? I’m gonna give you the exact date: on March 14, 2022, the stock had fallen to $102.18. Just hammered. Now, it had actually fallen and was trying to base around $135 a share. It was trying to consolidate there, but anything could have happened from there. And what happened? Boom. The bottom fell out.
So, what happened to March? Really… March 10 really was the day where pretty much some U.S. regulators kind of got a mind to say, “Well, there are certain Chinese ADRs we are thinking about delisting…” Bam. There they go. Bottom falls outta all of them once again. Just when they were trying to base. Just when there was maybe an opportunity to get in. Every anybody got shaken out very quickly.
But as far as Baidu goes… Yeah, $354 down to that ugly low $102.18. Where was it two days later? Two days later after that threat to de-list was gone or it had kind of been set aside? Baidu jumped back up to $150.87 in two days, people. So, it’s now above that $135 consolidation phase where I think it makes it a good buy. So, for your a hundred dollars today, I think you should buy a hundred dollars’ worth of BIDU.
Here’s why. It’s trading around $149… Now, it’s Monday as I’m recording this. I’m not sure where it’s going to close, but it’s up nicely on the day. It’s up… Let’s call it 6.75% today. But this is because the latest news is Chinese authorities, officials, and regulators are saying, “You know what? Maybe we will allow our companies to provide audited financials.”
Wow, that’s a big scene change, people. Not all the companies, but enough of them. And the exception probably being the ones that have state secrets that the Chinese wanna protect. Not really sure how they’re going to define that, but Chinese stocks are popping. All right. So I think this is a great time to buy Baidu. Buy it here at $149. The support is $135. You get nervous, you’re a Nervous Nellie, put in a 15% stop, which you should probably do anyway. 10% would take you right down to that $135. I wouldn’t sell at $135, that’s support. But if you put in a 15% stop, you nervous about your $100 (you should be nervous about every penny, people) then put in 15% stop.
That’ll take you below that $135 support and you probably will get out and you sleep well at night and reconsider when you want to get back in. But I don’t think you’re gonna get there. I think with your $100 today, you buy a hundred dollars’ worth of BIDU and I think you take it to the bank. I think this could be a 100% winner in, I don’t know, nine months, 18 months… No more than two years. That’s 50% a year.
I think you want to take that to the bank. Catch you next week.