Saturday afternoon

Some productive reading this afternoon: Chris Perruna (particularly Trading Mistakes: Avoid At All Costs), Silicon Alley Insider and Seeking Alpha. The observations about Microsoft-Yahoo never fail to be interesting.

Sakazaki examines the Baidu horizon

One of the better posts on Baidu that I have seen. Perhaps the best, actually. Lloyd Sakazaki doesn't purport that Baidu is a cheap stock here, and his breakdown of the numbers support his contention that time is on the stock's side.

Sakazaki: Is Now the Time to Buy Baidu Stock?

Among these U.S.-and China-based Internet companies, only Google and Baidu still show annual growth rates exceeding 50%. For 2007, Google's revenue is expected to expand to 58% above its 2006 level, while Baidu's revenue is forecast to surge 108%. For 2008, while consensus estimates show Google's growth slowing to 37%, Baidu's growth is projected at 78%. The message here is that China, being a younger Internet market with still only about 10% of its 1.3 billion population online, (pdf file) exhibits higher growth.

Is Sakazaki right about the growth rate? If he is, I'll be the first to crown him Genius of Baiduville. I hope he's right, frankly, and I still don't think the government would let its search engine leader lose to invader Google. Haven't you seen the morbid, yet amusing TV commercial?

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.

Krause: STV conservatively valued at $80-100

I'm open to hearing the bull and bear arguments regarding China Digital TV (STV). Here's one breakdown of the numbers that is actually conservative, yet insanely positive on the long side.

Michael Krause on Seeking Alpha: Does China Digital TV Measure Up?

I love you, I hate you (FMCN)

Eric Savitz explains the latest on Focus Media. It's a strange, suspicious scenario that I wanted no part of after the "delay" to straighten out the earnings report.

Eric Savitz: Focus Media Soars As Audit Committee Finds No Undisclosed Rebate Payments

Now that I'm out, the stock is running wild. I should've trusted Basic Axiom of China Stocks #1: No industry leader shall fail (not if the government can help it!).

Bear turns into a Crocs bull

A good analysis on the long side of CROX ... from a former doubter.

Seeking Alpha: Crocs: Better Late than Never

At $59, this gives forward PE of 30 (2007) and 23 (2008). Now I don't purport to know what a good valuation is for this company, since I am not sure what exactly to compare it to. But its growth rate in the recent past is certainly well in excess of 50%, and I'd argue the near future could continue to see 30-40% growth.

Let's compare it to Under Armour for example - Under Armour is actually a smaller company than Crocs by revenue (surprised me too), with very similar growth rates on the top line. At $65, it's valued at 65x 2007 estimates and 50x 2008 estimates. Very expensive.

While the topic is CROX, here's Rick Aristotle Munarriz's latest stance on the Co and stock.

Munarriz: No, the Clothes Don't Have Holes

Always interesting to see that one of Motley Fool's top writers continues to have a fair, bullish analysis on CROX. When the new year started, Motley Fool's members voted CROX as the worst stock of 2007.

Wii still reigns over discounted PS3, Xbox

Yup, I'm a sucker for those colorful, cool graphs about my favorite companies. Sort of like those birds that like to collect a million items for their nests just because they're shiny.

Max Freiert's piece on Seeking Alpha breaks down the latest news in the console wars. Nintendo is still king thanks to the Wii, even with the price cut for the PS3. The graphs by complete.com tell the story quite nicely.

Pupule Paul is long NTDOY.PK.

Blue Nile on fire

No big surprise here. Blue Nile (NILE) blows out estimates and raises guidance; I add the stock to my lists for the first time as a B+ stock. Then I change my mind and recognize the Co for what it is: on the cusp of greatness.

So it's an A- pick. The reasons? Many. One of the best facets of this Co is its presence online and lack of presence as a bricks-and-mortar entity. They can leave that burdensome encumbrance to Zales and Tiffany's.

Kevin Stecyk's piece on NILE via Seeking Alpha is a solid summary of where the young Co stands today. Although I've taken a look at the Co's numbers, Kevin's bullet points are as good a starting place as any for a NILE newbie like me:

• Net sales of $72.1 million, an increase of 26.7% over the second quarter of 2006;
• Gross profit grew by 32% and operating income grew by 39.8%, both were the highest that Blue Nile posted as a public company;
• Company claims to extend leadership position in online diamond and jewelry retailing as evidenced by its net income of $3.8 million and net income of $0.23 per share, representing an EPS growth of 28%;
• In Q2, total orders increased 27.2% as compared to a year ago;
• Average selling price per order was $1,630 in the second quarter;
• Website traffic growth was the highest since mid-2004;
• All retail channels—search, portals, partners, and email—were all very strong; and
• Sales and merchandise priced above $25,000 grew by 51%. One exceptional example was a single sale above $1.5 million from a repeat Blue Nile customer.

Certainly, I'll be doing a lot more reading about this intriguing company. Another quarter or two of great earnings could push NILE into A territory.

In the meantime, I'll be looking for a solid entry point, too.

Pupule Paul has no position in NILE.

Yared sees CROX at $80 in 12 months

Whether his brilliant pieces show up on Blogging Stocks or Seeking Alpha, Georges Yared delivers the goods.

The Yoda of the bull market brings truth in the face of doubters, bears and shorts all the same. Today, he wrote about CROX's blowout earnings report at Seeking Alpha. Yared also raised his target price to $80 for the next year.

He hasn't been wrong yet.

Also, here's a link to Zacks Equity Research's "Bull of the Day" piece. A quick excerpt:

We maintain our Buy rating and increase our target price from $54 to $70.

I wonder what the time frame is for Zacks' target price.

Pupule Paul is long CROX.

Not to fret, there will be other Amazonian moves

As I sat there watching Amazon's hurricane-level activity in after hours, I wondered.

I wondered if I should've dove in at $72 before I'd jumped in the shower. I wondered if a buy even at $77 would pay off as quickly as tomorrow. I wondered on and on. I kept my discipline, though, and I didn't try to catch a blazing thoroughbred with my bare hands.

Instead, I think about other wonderful companies that have many more moves ahead. One would be Nintendo. Though the stock has more than doubled since November, the climb is far from over. From the Wii to the DS to various old and new games, Nintendo is steadily climbing without a pinch of negativity in sight.

Roger Ehrenberg's eloquent piece about Microsoft's stagnation, Sony's demise and Nintendo's rise is a must-read. The evolution of growth stocks is something he analyzes well. His conclusion? Nintendo is in tune with the market. Period.

I admit there's a bias on my part, having played Madden Online with my PS2 during the earlier part of this decade. I played obsessively, and was even organizer of a few office Madden Leagues. Sure, this has a lot to do with Electronic Arts, but my loyalty to the PS2 and Nintendo was forged quite deeply, especially since those long-ago days of the original Nintendo console.

I'm already highly bullish, of course, on NTDOY.PK. As Amazon took off for the moon, I should've remembered, Nintendo is one of a handful of other companies that also have meteoric gains ahead. That's plenty enough.

Disclaimer: Pupule Paul is slightly long NTDOY.PK.