The information age has rewarded those who can package data in digestible ways. That’s rewarded companies like social media firms, which have allowed for users to share content with those in their networks.
And it’s allowed bigger tech companies to consolidate data that can make analytical predictions about consumer tastes and behavior. In short, content is king – and only a few companies are able to consistently profit from it.
In China, Baidu (BIDU) has a similar role to the one that Google (GOOG) plays in the United States. It’s an information technology company. And it’s performing well.
Besides beating on revenues in its fourth quarter, the company is launching a $5 billion buyback program. With a current market cap of about $48 billion, that’s just over 10 percent of shares that could be retired in just a few years.
Action to take: Besides a big buyback, the company’s industry lead in China makes it a reasonable long-term holding. While not profitable I the most recent quarter, shares trade at about 16 times earnings, a discount relative to peers such as Google.
For traders, Baidu shares have been trending higher since November, and are likely to continue to do so as the company improves operationally. The May $150 calls, last going for about $9.10, can potentially deliver mid-double-digit returns in the coming months on a further move higher in shares.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.