In this article, we discuss 5 stocks to buy as virus restrictions are lifted in China. If you want to read about some more stocks to buy as virus restrictions are lifted in China, go directly to 10 Stocks to Buy As Virus Restrictions Are Lifted in China.
5. Baidu, Inc. (NASDAQ:BIDU)
Number of Hedge Fund Holders: 47
Increase in Share Price Over Past Month: 22.17%
Baidu, Inc. (NASDAQ:BIDU) provides internet search services. The company posted earnings for the first quarter of 2022 in late May, reporting earnings per share of $1.77, beating market estimates by $0.94. The revenue over the period was close to $4.5 billion, up 1% compared to the revenue over the same period last year and beating market estimates by $320 million. The firm attributed the earnings beat to the “non-online ad business”, which registered a 35% year-over-year increase that was “driven by cloud and other AI-powered businesses”.
On May 31, Susquehanna analyst Shyam Patil maintained a Positive rating on Baidu, Inc. (NASDAQ:BIDU) stock with a price target of $200, noting that the long-term view on the firm was unchanged despite near-term China uncertainties.
At the end of the first quarter of 2022, 47 hedge funds in the database of Insider Monkey held stakes worth $1.5 billion in Baidu, Inc. (NASDAQ:BIDU), compared to 38 in the preceding quarter worth $1.4 billion.
In its Q3 2021 investor letter, Ariel Investments, an asset management firm, highlighted a few stocks and Baidu, Inc. (NASDAQ:BIDU) was one of them. Here is what the fund said:
“When we have such a high level of conviction for a company it is not uncommon for us to own it in size across our portfolios. Such is the case with technology giant Baidu, Inc. (NASDAQ:BIDU), whose leading search engine has been dubbed the “Google of China.” This quarter shares sold off in sympathy with the Chinese internet sector as investors were rattled by the government’s sweeping regulatory crackdown intended to promote “common prosperity” by easing wealth inequality. While we recognize the greater political risk of investing in emerging markets such as China and incorporate an appropriately higher risk premium in the discount rate in our valuation models, we believe Baidu’s business strategy is aligned with national policies and priorities and is therefore not adversely impacted unlike some other players in the internet sector who are in the eye of the storm.
Indeed, the Chinese government recognizes Baidu’s large, upfront investments in many next-generation artificial intelligence (AI) technologies and hails it as a national champion. For example, the company’s Advanced Driving Support System (ADAS), Apollo, has twice as much data on miles driven than any other initiative in the world, giving Baidu (and China) a large lead in the global AI arms race. In addition, Baidu’s cloud offering touts highly differentiated Platform as a Service (PaaS) features and capabilities for a demanding enterprise customer base. While these initiatives are a temporary drag on margins and require long-term execution, their success will bolster China’s “dual circulation” strategy aimed at spurring domestic demand, innovation and self-reliance.” (Click here to see the full text)
