Baidu launches into orbit

Baidu is up $20 with a couple of hours left in today's session. Quite a reversal from yesterday's after-hours trading when BIDU plunge to $300, then finished up at $320. So what was the deal yesterday after hours? The earnings report was positive, if devoid of huge surprises. Was it panic selling? Market makers manipulating their shorts? Maybe.

I'm just glad to have a few more shares of a Co I've touted for some time. Now if I only could turn back time and buy shares of CNOOC. How I pounded the table back then when the P/E was 11 and the PPS was 90. I never bought a share. I didn't know oil stocks could be so dot.com-bubblicious.

What else is up this morning? Just about everything. Even though there were naysayers who cautioned about Countrywide Financial's earnings report and how it could dampen the market, nope, nothing bad happened. The market already anticipated a mess, and then Countrywide was basically positive. Wow.

Under Armor continues its ascent, trading up 6% to 60. UA was 54 a few days ago, but I held on, not for me, but for my nephew. He wanted some shares of one of his favorite companies, and I obliged.

Crocs was at 65 yesterday, well below its 10-day moving averages. A clear buy signal for a true 'box' stock. Well, CROX is now above 68 again. VMware is pulling back to no surprise. I'm waiting for lululemon to finish building this new base at 50 and rocket again. Might be waiting until they announce earnings in several weeks from now. No matter. When (and if) the Fed announces another rate cut next week, retailers will ride the bounce nicely once again.

Players and the House are one and the same

One of the better summaries of the Chinese oil industry. Not a comprehensive history, but a nice breakdown of CNOOC Ltd. (CEO), PetroChina (PTR) and Sinopec (SNP) by Randy Kirk.

CNOOC Limited: Future Oil Supermajor

Bohai Bay in Northern China is CNOOC's largest production area currently, and, over the near term, is the Company's highest priority development area. The area has significant potential, as in March, 2007, PetroChina discovered 7.3 Billion Barrels of Oil equivalent in Bohai Bay, the largest discovery in China over the last 30 years. Note that this discovery was the result of significant exploration activity by PetroChina, as development costs for the exploratory wells totaled $780M for PetroChina.

(Note also PetroChina's stock moved up 12% with the announcement of the discovery in 3/07). CNOOC has stated that it has several prospects for Bohai Bay going forward, and the majority of CNOOC’s 2007 and 2008 exploration and production budgets have been earmarked for Bohai Bay.

In other words, the Chinese government will split up the goodies to keep all three of its oil kings to remain competitive on a global (market cap) scale. Oh, how I wish I'd bought CNOOC back at 92 two months ago. In the face of a big down day in the market today, CEO closed up 2.3% to 170. PTR was up 3% to 193.

Why fix it if it ain't broke?

So why would CNOOC Ltd. go somewhere that doesn't really need 'em? I mean, they are so good at what they do, drilling for nat gas and doing the oil thing ... and now they're opening gas stations?

Chinese Oil Giant Opens 1st Gas Station

I suppose, at this point, CNOOC is up to its gills in yuan and could do anything it wanted and make more money just about anywhere? I wonder if the gas stations will have little convenience stores that sell coffee, tea and CNOOC energy drinks. Hey, might as well strike while the iron is hot, right?

Maybe not. I have my doubts. It ain't broke, so why bother touching it? This bothers me, and I'm not even long this stock.

$100 oil on the way

Sure, gas prices dropped over the weekend, and OPEC will loosen its iron-fisted grip on exports by 2% starting next month. But with China's oil imports up 18% and supplies still limited globally, $100 for a barrel of crude is a near-lock. All it'll take is an incident or two in the Middle East, plus continued increase in China's consumption.

Oil prices barrel ahead toward 100 dollars: analysts

With China's market at all-time highs — Shanghai went bonkers again — and CNOOC Ltd. (CEO) down more than 5% in premarket trading, it's time for another look at my favorite oil/nat gas stock. The 10-day SMA for CEO is 162, and this premarket pullback leaves the stock at 155 right now. Is CEO a buy? Yes, but ... the stock has not filled the gap since leveling at 132, then rocketing to the moon.

Pupule says: Buy small, if at all.

Slick patch for CNOOC buyers

CNOOC Ltd. (CEO) fell again today, which is no surprise. As I wrote yesterday, there is a significant gap that may or may not be filled for the stock. It ran from 125 to 171 with hardly a breather in the past four weeks. Today's 1.6% drop to 154 was welcome. Volume declined, and the stock actually hit an intra-day low of 149 before bouncing.

At 149, CEO was nearly 13% down from its all-time high. Quite a plunge in just four sessions, but that's the nature of the crude oil market today. Was today the turnaround point? Who knows?

Pupule says: Buy small. Though the stock is below its 10-day moving averages (SMA is 161, EMA is 158), I'd like to see volume shrink significantly on a down day tomorrow first. Conversely, I would not be surprised to see CEO run back up from this point.

CNOOC (CEO) in LNG for some RMB, you see

I have no idea how liquefied natural gas (LNG) works, but it sure sounds mighty cooooool!

China starts constructing 1st LNG cold energy project

Oct. 4, 2007 (China Knowledge) – China started the nation's first air-separation joint venture that uses liquefied natural gas (LNG) cold energy in Fujian, a province in Southeast China, on last Saturday, according to China Daily.

CNOOC takes a dive

How infatuated am I with CNOOC Ltd. (CEO)? Well, there are only two stocks that I have mentioned more: Apple and Nintendo. But, again, there's a difference. I own shares of AAPL and NTDOY.PK. I've yet to buy a share of CEO.

Hypocrite. That's what you call someone who won't buy one of his favorite stocks in the world. At 92. At 111. When CEO was trading below its 10- and 50-day moving averages, I didn't have much dry powder to scoop up a few shares. Fast-forward a month or two, and I can accurately say that being out of the stock made no sense, considering China's a) industrial growth (11.9% for Q2), and b) insatiable thirst for oil.

That's why today's fall in CEO's price is compelling. Down 6.6% to 157, it's not cheap, but it is trading at a discount. CEO hit an all-time high of 171 two days ago as oil prices hovered above $80 per barrel. But the kicker with CEO is that even on days when the price of crude dropped, the stock would sometimes rise. Demand in China is monstrous, and CNOOC is state-owned. Between CEO and BIDU, I don't know of two other stocks that have so much protection.

So, is CEO a buy at 157? The stock is trading below its 10-day SMA (161) and EMA (159). The 50-day SMA is 126, and if there's a floor to be met, it could be in the 135 area. A big gap to fill after two weeks of an insane run. I could argue that CEO is a buy here, but only a crazy person goes in big.

Pupule says: Buy small, wait for another fall. Though I think this stock doubles or triples in a relative blink of the eye, price rules. Patience will be rewarded.

CNOOC: The 'other' Baidu

I pumped my tank full during an all-too-rare stop at Costco in Iwilei over the weekend. At $2.98 per gallon, I was happy to get the lowest price on Oahu. I was also happy to get a $1.50 hot dog and soda deal a few minutes later. Neither the constant use of gasoline nor the consumption of hot dogs and soda are any good for our bodies and the ecosystem. But there I was, getting a good deal all the way around before driving off to cover a football game 25 miles away.

Gotta get it cheap, no escaping that. But as gas prices come down, I can't help but expect $4 per gallon in the near future. Crude oil prices hit $83 per barrel today, and with production declining (supposedly) in the Middle East, we're at the mercy of producers, refiners and everyone in between. So, if we can't beat 'em, why not just join 'em?

I remember pounding the keyboards for CNOOC Ltd. (CEO) over the past few months. Again and again, I ranted and raved about the great future of this Co. I vividly recall writing about the stock (CEO) being a steal in the 90s, 100s, and in the 110s recently. The P/E hovered at 11 for the longest time. Not the best of breed in China — that would be PetroChina — but with 1.3 billion residents and a major increase in auto sales and gasoline demand, CEO is a prime best-of-all-worlds kind of stock. Not just being in China and being an oil/natural gas Co, but having the protection of its government.

And yet, I didn't buy a single share.

So CEO ran from 92 (subprime sludge low) to 155, pulled back today to 148 and is completely not fit for purchase, technically. But I think Goldman Sachs is right. Oil will hit $100 a barrel sooner than later, and GS could be right about a $135 price. (I don't even want to imagine the possibility of $200 per barrel.) Does the average man or woman have any way to fight back against these exhobitant gas prices?

A part of me wants to say, "Yes. If we can't beat 'em, join 'em! Buy all the CNOOC and PetroChina and Exxon and ladee-dah oil stocks that you can!" I mean, CNOOC ran up 60% since August 16, so there were many opportunities ... if you had dry powder. As gas prices rise in the coming weeks, I'll be more peeved and more eager to buy some CEO for the first time.

Coming soon, $200 for a share of CNOOC Ltd. Who woulda thunk it? CNOOC is the other Baidu.

Do not touch when hot

It's preposterous if you're out and prosperous if you're in. Chinese stocks are on fire, partly because of the slowing U.S. economy, as well as the insatiable appetites of traders who can't resists the lure of the Middle Kingdom.

In a way, I can't blame them. So much growth is ahead in China, and the protectionist government is something to behold. They even banned Boeing from selling planes to Chinese companies, which is a just one reason why China's airline stocks are among the very best performers year-to-date.

With tomorrow's Fed meeting ahead, Baidu is on fire. But so is Focus Media, an advertising company that ran into trouble a few months back and still hasn't reported Q2 earnings. The ADRs slumped to 35, but have gained ground recently and traded at 46 today. Would this ever happen with an American stock? Up 30% on a two-month earnings delay?

Preposterous, but if you own FMCN, you're smiling.

The ultimate "safe" stock in the current environment has to be CNOOC Ltd. (CEO), my favorite oil and natural gas Co in the world. How much safer can a growth stock get? Oil hit a new mark today (well over $80 per barrel). The Co is based in China, but exploring off shore in places like Indonesia. Put the ingredients together and it's easy to see how the ADRs went from a low of 92 (August 16) to today's 133.

I pounded the table hard, hard, hard for CEO when it traded below its 13- and 50-day MA. And yet, I didn't buy a share. If and when oil prices drop, I'll be watching the chart closely again. Of all Chinese stocks, I tend to think that the government's protectionism applies more so to oil companies than any other given the geopolitical climate. The U.S. owes China, China owns the U.S. indirectly thanks to our consumer spending addiction, and the Chinese will sell their oil to anyone, regardless of politics.

I still won't buy any China ADRs unless the technicals are sound and/or there is a compelling catalyst. Watching is best here.

Preaching to the CNOOC choir

Yes, CNOOC's revenues decreased this year to date due to fluctuating oil prices. They are still in the best big growth market in the world. That's why I don't need Zacks.com to tell me this. They're preaching to the choir here.

Zacks.com: CNOOC Still Trades Fairly Cheap

Zacks senior Chinese market analyst Paul Cheung, CFA remains bullish on CNOOC, Ltd. (NYSE: CEO - News), even after the company's impressive gains over the past few years.

China, oil and changing geopolitical times

Given my utter adulation of Cnooc (CEO), China's No. 2 oil and natural gas corporation, this piece offers some balanced perspective. Gal Luft of the Institute for the Analysis of Global Security explores the impact of China's accelerating need for oil.

Fueling the dragon: China's race into the oil market

Here's an excerpt:

In the Western Hemisphere China concluded oil and gas deals with Argentina, Brazil, Peru, and Ecuador. But its main country of interest is Venezuela, U.S.' fourth largest oil supplier. A series of oil agreements signed in early 2005 allow Chinese companies to explore for oil and gas and set up refineries in Venezuela. Chinese state-owned oil companies have also begun seeking ambitious oil deals in Canada, the top petroleum supplier to the U.S. China’s continued penetration into the Western Hemisphere could have profound economic and political implications for the U.S. Considering the fact that both U.S.’ and Mexico’s domestic crude production are falling, the U.S. cannot afford to lose chunks of the crude produced by the two countries that together supply a third of its oil imports. With less oil available to the American market the U.S. will be forced to seek this oil elsewhere, primarily in the Middle East, hence becoming more dependent on this tumultuous region.

Luft's piece touches on the battle between China and Japan for potential oil/gas turf beneath the East China Sea. Things are not comfy there right now, I'd say.

Here's a series of solid pieces and threads that include Cnooc's attempt to buy Unocal in 2005. More insightful and resourceful than the average stock message board.

PekingDuck.org: America's paranoia over China's bid for Unocal

Going, going . . .

ADRs of CNOOC, my favorite international oil and natural gas player, soared again today as money poured into China.

The stock closed at $124 and now has a P/E of 12.92. Just 11 days ago, CEO traded at a low of 92 due to the mortgage massacre. What that has to do with a Chinese energy company, I don't know. But a lot of smart people scooped up ADRs of CEO real quick, and the stock continues to gap up faster than a 1998 internet-bubble stock.

The current P/E is relatively high for an oil company, but the growth prospects of CNOOC can't be denied. The stock trades way above its 13- and 50-day moving averages now, and some consolidation is probably coming. Or not. A rise of 33% in 11 days, or eight trading sessions, is not sustainable. Right? I'll wait.

Barker bites off a chunk of fundamental wisdom

This well constructed piece by Bill Barker at Motley Fool is worth reading for all of us who rely on fundamentals.

Barker: The best buying opportunity in 12 years

Though the piece is more than a week old, it's still timely. The market has rebounded, as expected, with positive news from the Fed, but today's slowdown in a sizable segment shows me that there will still be underpriced stocks worth watching this week. (Like a lot of us, I regret not having a lot of dry powder when the market hit its recent bottom last week.)

As far as low P/E stocks go, CNOOC (CEO) still blows me away with its 11 P/E, huge growth and upside potential in Asia. Oil and natural gas are not going to die there. The stock is up from its recent low of 92, but even at 104 is at a discount to its all-time high. Before the recent selloff, CEO hovered around 120.

CEO would make an interesting 'handcuff' buy along with a growing alternative energy play in Asia like Yingli Green Energy (YGE).

Pupule Paul has no position in these stocks.

Ewing on China and international oil ripples

Excellent piece by Kent Ewing, a Hong Kong academian, about China, oil and international relations.

Ewing wrote this in October of 2006 and China's need for energy has become more compelling than ever.

The worrisome question for analysts is whether, now that Beijing is going full-throttle to fuel its continuing economic boom and boost its rise as a world power, the country’s thirst for oil will drive up world prices and bring it into conflict with the United States, Japan and the European Union.

By the chart: A- shopping list

Now that Big Ben has essentially told the markets, "You made your bed, go sleep in it," volatility is here to stay.

The good is that strong companies will still maneuver through the muck and reach new territory in the market. Weak companies? Investors will have less of a pain threshold for those little puppies who need boatloads of free cash to stay alive. Rough world.

Looking at the charts, here's how I view my A- picks on the shopping list. A bargain is a bargain is a bargain. No sense overpaying for great stocks when they always come back to a decent price. I don't think we'll see AAPL at $128 again soon, but I think it's a buy here. This list may help you (or not), but it will serve as a reminder to myself to avoid chasing a runner! It happened last week when I added more Nintendo at $62. Whoops.

AAPL 135
Middle of simple and exponential moving averages. Pupule says: Strong buy.

AMZN 79
At top of moving averages. Low volume today. Big fight between longs and shorts. Pupule says: Wait.

BIDU 199
Near top of moving averages. Below-average volume lately. Though I wanted to see BIDU come back down to 175, that looks out of the cards. Pupule says: Buy.

CEO 112
At bottom of moving averages. Soft upside volume, but the funamentals and the new deal in southeast China are positive. Pupule says: Strong buy.
[Note to self: If CEO trades at the same P/E as PetroChina (PTR), its PPS would be 124.]

CMG 108
Floating above moving averages. Pupule says: Wait.

CROX 57
Slightly above moving averages. Pupule says: Wait.

FWLT 106
At bottom of moving averages. Earnings next week. Pupule says: Strong buy.
[Note: FWLT traded at 111 in extended hours. Not so strong a buy at that level, but still in range.]

GOOG 516
No longer below moving averages with the nice gains in the past two sessions because of the wireless advertising (cellphone) dimension. Not as cheap as last week. Pupule says: Buy.

GRMN 100
Floating above moving averages. Pupule says: Wait.

NTDOY.PK 58
Just above moving averages, but this stock is so hot that it rarely trades within. I might get more here. Pupule says: Wait.

RIMM 222
At top of moving averages. Tough call here. Pupule says: Wait.

UA 64
Floating above moving averages. Pupule says: Wait.

Pupule Paul is long AAPL, BIDU, CROX, NTDOY.PK and UA.

Pupule Promotions: CEO, CMG

I've never been to China, but I've been in Taiwan. Never been to Chipotle Mexican Grill, but I do like Chipotle sauce.

So why am I promoting CNOOC Ltd. (CEO) and Chipotle Mexican Grill (CMG) from B+ to A- on my list of stocks? It's love. CNOOC inked another new contract, this time to bring natural gas out of Indonesia to the thriving region of Southeast China.

Growth begets growth, and CNOOC is executing so well and still trading at only 11 times earnings. A steal, especially at $112, where it is trading at the low side of its moving averages.

Chipotle Mexican Grill not only routed earnings estimates, but raised guidance. Other A- picks like Crocs and Under Armor did the same beforehand. CMG is the fastest growing restaurant in America worth buying. When I first saw the stock, it was at $86, and eventually tumbled to $77 on cost issues.

So much for issues. At $108, CMG longs are happy with their smokin' hot stock.

The good news for both stocks is that there's much more upside ahead. China will continue to grow — last quarter was 11.9% growth in the economy. CMG could still expand with success nationwide. The Co knows how to manage and execute efficiently.

They earned the A-.

Yes, B+ picks can be bargains too

Here's my shopping list for Monday, when the market could resume the Big Dipper, then turn around at mid-day.

I never cared for roller coasters, but that's what we're on for awhile. My wish list, current prices and target buy prices (highly adjustable):

[B+] China Medical Parts (CMED), now 32, target 30
[B+] CNOOC Ltd. (CEO), now 113, target 111
[B+] Darden Intl. (DAR), now 8.03, target 7.50
[B+] Flowserve (FLS), now 68, target 65
[B+] Focus Media (FMCN), now 39, target 35
[B+] Gmarket (GMKT), now 22, target 21
[B+] HDFC Bank (HDB), now 81, target 73
[B+] Intercontinental Exch. (ICE), now 153, target 140
[B+] Opsware (OPSW), sold to HPQ at 14.25
[B+] Potash Corp. (POT), now 85, target 77
[B+] Precision Castparts (PCP), now 137, target 125
[B+] Salesforce.com (CRM), now 39, target 27
[B+] SanDisk (SNDK), now 53, target 49
[B+] Sina Corp. (SINA), now 42, target 40

Dammit, where's the barf bag?

B+ picks slide, but Potash still rising

The B+ gang of picks is holding up fairly well, but that's like saying there were survivors of the Titanic. Fortunately, no lives are being lost in today's market, no matter how bloody.

With Dow Jones down 281 points (2.1%) and Nasdaq off 64 points (2.5%), five of the B+ picks were down more than 3%. Flowserve (FLS) sank 4.7% to $68.87 after announcing that it would sell its Swiss manufacturing facility.

HDFC Bank (HDB) of India was down 4.5% to $81.71. No bad news. Just a big bank being hit hard like all the financials. Whether the credit issue pertains to India is another question.

Darling International (DAR) got an upgrade on Monday, but sold down with the rest of the market. DAR closed at $8.03, down 4%.

China Medical Parts (CMED) and CNOOC Ltd. (CEO) were hit by U.S. volatility, as well. No bad news for either company, which could make CNOOC extremely attractive. With a P/E of 11 and return on equity of 34%, I admit it. I'm tempted.

Of the 13 B+ picks, five are in the green. Potash (POT) continues to trade like an internet bubble stock. The fertilizer company is up another 1.9% to $85,35. When I took notice of Potash a few months back, it was at $210 (pre-3 for 1 split) and it look overpriced. Wrong. I was wrong. As long as agriculture is hot, so it will be with the big POT.

SanDisk (SNDK), Focus Media (FMCN) and Intercontinental Exchange (ICE) are also up. SNDK had a great earnings report a couple of weeks ago, but has pulled back from its recent high of $62. SNDK is trading at $53.43, up 1.6% for the day.

FMCN is up on no news, but the stock has been hammered in the past month since the Co asked Nasdaq for a hearing regarding two letters from a short seller. FMCN traded up 1.1% to $39.82, well off its high of $52.

Bond issue sinks CNOOC momentarily

Now it makes sense. Shares of China's largest off-shore oil Co, CNOOC (NYSE: CEO), dipped more than 3% today and I assumed it was because of the schizo nature of the market.

I was wrong. Bloomberg reported that the drop was linked to a bond issue that the Co settled today. CEO dropped to $114.77, which looks like a nice discount. It's well off the high of $124.99 on June 23.

As much as I like alternative energy, fact is that China needs gas for its cars, and at an 11.9% growth rate, the economy is in no position to hit the pause button. This is the lowest P/E (11) of any stock on my A- and B+ lists, but I think I'll wait this situation out.

Pupule Paul has no position in CEO.

Bargain hunting can be dangerous

A bargain hunter's paradise? Perhaps.

While most investors are staying out of the water (and I still wish ABC hadn't cancelled Invasion), I can't help but scroll through my favorite stocks at discounted prices.

• AAPL. What gives? A dumbass rumor sent this down to $131. It's still a steal in after-hours at $132.86. I know there is an issue with the iPhone's security flaw. But this is my favorite Co in so many ways beyond my devotion to this aging PowerBook. Apple will fix the problem as long as Steve Jobs is cracking the whip.

• BIDU. This got knocked down to $199 before closing at $201.98. Stellar earnings and supreme confidence by CEO Robin Li. Oh, and they have the backing of the world's toughest gang, the Chinese government. You say protectionism, I say Big Bubba got their back.

• RIMM. I'm not a fan of the Blackberry. Never touched one. But the fundamentals and growth (hello China) are astounding. RIMM shares peeled back 2.7% to $214. Bargain? Maybe.

• GOOG. Down just 1% to $510. As much as I love the Co, I just don't look to GOOG for my buys. I probably should. These guys won't split the stock, won't give guidance to analysts ... they do things right.

• CEO. Yup, I am still high on CNOOC Ltd. It pulled back a couple of bucks to $118.60 by the close. Still trading at just 11 times earnings. CEO was a steal before this correction.

• GRMN. Losing 1.3% today doesn't make Garmin a big discounted stock at $83.90. But earnings are out tomorrow, and sales are healthy. With GPS showing up in and on almost everything these days, $83 could well be a discounted price. I just wonder if slowing auto sales will have an impact right away.

• UA. Under Armor blew out earnings expectations, raised guidance and zoomed up 17% to $64.75 today. Then came the broad market selloff, along with profit-takers. At $61.41, UA is still 12% up from yesterday's close. But short interest is 50%. FIFTY PERCENT. Very compelling here. I should get some shares for my nephew sometime soon.

Maybe it's too early to wade back in. Maybe buyers will get caught in the tide. The companies that have destroyed bears with an arsenal of great earnings are lovable. More lovable when they raise guidance. Those would include UA and CROX.

Pupule Paul is long AAPL and BIDU.