Baidu.com, Inc. (ADR) (BIDU), Qihoo 360 Technology Co Ltd (QIHU), And Some Cheap Chinese Plays

There are signs that the global economy is starting to slide, and China’s getting blamed again.

This morning’s overseas slide in copper prices is being pegged primarily to fears that Chinese demand for the industrial metal is waning.

Merrill Lynch went one step further, slashing its projections for GDP growth in China. Merrill Lynch now sees the Chinese economy expanding at a 7.6% clip this year, below its earlier 8% forecasts.

Should investors dump their Chinese growth stocks now?

No.

For starters, Merrill Lynch’s move comes more on the concerns that external demand for Chinese products is diminishing. In other words, as bad as things may be in China, it’s even worse elsewhere. That’s still not a positive sign, naturally. If external orders dry up there will be less money going into the Chinese economy. However, at least it doesn’t mean that the weakness originated within China itself.

Oh, and let’s not get greedy. It’s true that China was growing at a 10% rate for many years until recently, but most countries would love to see GDP expand by 7.6% this year.

Then we get to the valuations. There are some solid Chinese companies trading at some ridiculously cheap earnings multiples.

Let’s take a look at five of China’s Internet companies that may be fetching cheaper than you think.

Source: Yahoo!.

Some of the multiples are lower than others, but these are all companies growing a lot faster than their stateside equivalents.

High-five
Baidu.com, Inc. (ADR) (NASDAQ:BIDU) is China’s leading search engine. Despite the recent arrival of Qihoo 360 Technology Co Ltd (NYSE:QIHU) — another name on this list that I’ll get to shortly — with its own search engine last summer, Baidu.com, Inc. (ADR) (NASDAQ:BIDU) still commands the lion’s share of this lucrative market. Baidu.com, Inc. (ADR) (NASDAQ:BIDU) is the only one of these five names trading lower than when I singled them out as cheap late last year, but it’s still growing at a healthy clip. Seriously, if you’re passing on Baidu.com, Inc. (ADR) (NASDAQ:BIDU) at just 15 times forward earnings at a time when the slower-growing global leader is fetching 17 times next year’s projected profitability nothing will ever please you.