I’m often asked about the Chinese Internet stocks, probably because people who read me know I owned Google and Apple from their infancies. Are these guys the next Google and Apple?

Q: I would like your feedbacks on Chinese search engine stocks, such as SOHU, SINA and BIDU. Recently they have huge pullback and just want to see if it is a good time to buy now? Thanks a lot and keep up the good work!

A’s:

• SOHU – It’s a Chinese Yahoo with a wireless edge to it. That is, it’s not exactly the dominant Internet play in China (that would be Baidu), but it does have enough of a burgeoning wireless business that there could be some nice upside to the Street’s estimates, which focuses mostly on the traditional Internet businesses at SOHU. With $10 per share net cash and that wireless edge to it, I like SOHU at its 52 week lows here near $60. Earnings should jump from the mid $4s to the mid $5s, giving a 20% plus bottom line growth rate. With a current forward EV/earnings ratio of less than 10x. Revolution Investment rating: 7/10
• SINA – With $9 per share, $600MM net cash on the balance sheet, this stock would be very interesting to me if it were at about $20 or so. But the company will only earn $1.58 next year. And while that’s a nice growth rate on top of the $1 they’ll earn this year, that’s not enough to get me interested in this also-ran from the China Net world. BIDU is the one I’d prefer.
• BIDU – As their Finance Yahoo description so modestly puts it, “Baidu, Inc. provides Chinese and Japanese language Internet search services.” Man this is a juggernaut of a company, people. Analysts like to call it “The Chinese Google”, but maybe a more accurate way of phrasing it would be to call Google, “The American Baidu”. At $138 per share and with earnings likely to go from less than $3 this year to close to $5 per share next year, the stock is deceivingly cheap. Revolution Investment rating: 7/10

And be sure to check out my Revolution Investing Newsletter published here on Marketwatch.

Cody Willard writes Revolution Investing for MarketWatch and posts the trades from his personal account at TradingWithCody.com. At time of publication, Cody net long Google and Apple.

Here’s the second half of the transcript to this week’s “Stocks-Only” chat on TradingWithCody.com.  See you next week back at TradingWithCody.com/chat where I’ll answer anything you ask me.  You can read the first half and get my latest analysis for Apple, Riverbed, Wells Fargo and others by clicking here.

Q: How about BSX? BSX – See here’s another industry, like oil & gas, that’s way too dependent upon government subsidies/payment systems for me to get interested in it at just about any price. Someday this broke government is going to seriously have to cut corporate welfare programs (all social welfare costs in a given year are about 1/10 of the current spending all corporate welfare at this point) and I don’t want to be investing in one of these types of companies that sell into the corrupted/corporatist/wasteful healthcare government system. I’d rather own, say, Apple.

Q: I have a put spread in infa, would this be a better buy and hold candidate with the cloud movement? A: INFA – The company gets a lot of buzz because it does all those indefinable enterprise networking/data accessing stuff. That is, people love to call it a cloud play and the stock has been flying as a result. The biggest problem with this one is mainly the valuation at these levels. Would you rather pay 30x next year’s earnings for INFA or less than 12x earnings for, say, Apple. That said, the outsized gross margins in this stock certainly provide a lot of earnings leverage if the topline can continue to grow. Revolution Investment rating: 5/10

Q: Thoughts on QNST? QNST – A good play on Internet marketing growth. The question is whether there’s a place for this company in the app/smartphone/iTunes/Android world. We’re not exactly entering a post-Internet phase, because the entire app/smartphone/iTunes/Android eco-system, but QNST’s got its work cut out for it to stay relevant in coming years. At $10 a share and with a balance sheet that’s got a chunk of debt on it, I’m leery. Revolution Investment rating: 4/10

Q: Cody, do you know of any other daily chats that revolve around options and options trading? Your service is very helpful. How about Vistaprint? A: VPRT – I love Vistaprint the company’s products. So easy to use, very well-designed interface and the ability to put your logo on stuff and/or sell that stuff cheaply means these guys actually have some barrier to entry despite being such a commoditized kind of product/service. At $26 near its 52-week lows and down 50% from its highs, I’m liking it a lot. $5 plus per share net cash and going to earn $2 next year, up from $1.60 this year. Nice set up here for investors and traders. Revolution Investment rating: 8/10

Q:  Thanks for helping me navigate these  horrid markets of late. Do you have an opinion on DMD? A: DMD – Social networking is the next big thing, didn’t you hear?! Sigh. The problem with DMD is that it’s a clear also-ran in the social-networking world. And social-networking, like most things on the Internet, is mostly a winners-takes-all kind of business. So also-rans usually lose out and fade away over time. The company *might* earn up to 40 cents next year. That still makes it a 20x P/E, as the balance sheet doesn’t provide much cushion either. Revolution Investment rating: 3/10

Q: Hi Cody, what do you think about FNSR? A: Optical component stocks have had a heck of a year. Last year at this time, companies like FNSR, OCLR and JDSU were struggling to keep up with demand. FNSR saw it stock price go from under $15 in Sept 2010 to over $46 in March. However, weak guidance in their March earnings report caused the stock to plummet and it took the whole group with it. Rising inventory levels at customer warehouses brought back memories of the early 2000″s bust where inventory gluts crushed these stocks for years. This isn’t the early 2000″s though and insatiable demand for bandwidth, driven by mobile computing and new technologies like Cloud Computing, have soaked up the excess capacity built in the late 90″s. There are indications that the recent inventory worries for these companies may be ending. In FNSR’s last report on September 1st, they guided higher for the current quarter and the stock has made a nice move back up since. Also, an article today in Lightwaveonline indicated that the inventory buildup from the first half of 2011 may be at an end for the group and sales are expected to pick up the 2nd half of the year. Revolution Investment rating: 6/10

Q: Cody, New subscriber here. So far, so good. Thanks for the tip on VIX calls. Opinion on FIO please?  FIO is a newly listed company in the virtual storage field. Fusion IO. Apple co- founder Steve Wosniak is on the board. A: Randy — holy optics! That things been trashed. Down 50% from its highs since the IPO and at a 52-week low today. I’m going to look at this one more in depth. Hmm. Thanks for flagging it for me, it’d been off the radar

Okay, guys, that’s it for today. As a famous Beatle once said, “I’ve got blisters on my fingers!” Man, that was a lot of typing. So I’ll see you back here for the chat next week and I’ll have some trading updates to send out exclusively to you dear subscribers of TradingWithCody.com as usual in just a bit too.  Thanks for joining the chat today and thanks for subscribing!

And be sure to check out my Revolution Investing Newsletter published here on Marketwatch.

Cody Willard writes Revolution Investing for MarketWatch and posts the trades from his personal account at TradingWithCody.com. At time of publication, Cody was net long Apple.

Here’s the first half of the transcript to this week’s “Stocks-Only” chat on TradingWithCody.com.  See you next week back at TradingWithCody.com/chat where I’ll answer anything you ask me.  You can read the second half and find my Revolution Investment ratings for a bunch more stocks by clicking here.

Q: Hi Cody! Thanks for the profitable service! Does MS stand out in the graveyard that is the financial space? I noticed some significant insider buying around the $22 level…or is this just painting the tape? A: MS – Morgan Stanley would be bankrupt tomorrow if not for the outrageous ongoing welfare programs for the banks that have been created in the last three or four years. We’re talking about trillions of dollars of welfare and accounting gimmicks to keep these idiots afloat. There will come a time when the banks are a buy. I don’t think we are there yet. I want to see some outright bankruptcies come through so we know these balance sheets aren’t as wrecked as we know they are right now. No, I wouldn’t buy MS.  Revolution Investment rating: 2/10

Q: You have a great service. Can you analyse for me stock CBI, please? It is a tech, but in Oil & Gas industry. CBI – A good company in a very cyclical sector of oil and gas. I’m not a big believer in the oil and gas industry, mainly because I can’t decipher how much of their profits are based on welfare/tax subsidies/etc and I’d rather invest in straight up growth companies and sectors that are as independent of government-subsidization for their business model as possible. Like, say, Apple.  Revolution Investment rating: 4/10

Q: What’s your latest analysis on RVBD? A: RVBD – The company’s positioned very very well in the network as they help big companies get more bandwidth out of their existing networks for a cheap price. That is, there’s an almost immediate return on the investment in RVBD products and that’s a no-brainer for an IT manager. But I sure don’t like seeing all the insider selling followed by a stagnant stock. I’m holding my calls steady but not adding right now. Revolution Investment rating: 8/10

Q: Dear Cody, I am grateful for the informative and really funny articles! Do you think WFC still has a downward potential, is it worth for shorting at this level? It seems it only follows EU austerity news and actual positive/negative mood of economy environment. Thank you. A: WFC – I’m a bit worried about the way the stock has been stopped and is bouncing off the mid-low $20s. From a valuation perspective (if you believe their balance sheet disclosures, which I think are a joke) it’s going to be hard to crack from here. I’m holding the very profitable puts we own in it steady.  Revolution Investment rating (as a short, which I am): 7/10

Q: Any view on brcm? Thanks for all your insights. A: BRCM – With $6 per share net cash on the balance sheets and trading at $36 per share with $3 per share in earnings, next year, you’re only paying about 10x earnings for this very-well positioned company. The problem is that competition is also well-positioned and margins are going to be hard to expand this year and next. Longer-term, this is a great stock and at these levels it’s a very good buy. Revolution Investment rating: 7/10

Q: I am an appreciative subscriber! Cody you put a lot of heart into why are you at this and so there is a strong resonance on the level of politics and social justice and as a athlete and lover of playing sports in my life…what is the next pitch going to be?  Any opinion on qnst? A: QNST – A good play on Internet marketing growth. The question is whether there’s a place for this company in the app/smartphone/iTunes/Android world. We’re not exactly entering a post-Internet phase, because the entire app/smartphone/iTunes/Android eco-system, but QNST’s got its work cut out for it to stay relevant in coming years. At $10 a share and with a balance sheet that’s got a chunk of debt on it, I’m leery. Revolution Investment rating: 4/10

Q: Hey Cody Vin hear, I appreciate the youtube video clips you include in your newsfeeds! I wanted to get your current thoughts and view on GLW. (thinking about jumping in big). A: GLW – A whole bunch of those smartphones and tablets sold this year and next and the next after that will have some Corning glass in them. With nearly $3 per share net cash and with earnings likely to get over $2 per share, up 10% from this year, this stock is cheap at $13 right now. I mean 5x earnings cheap. The big concern is inventory gluts in the TV and non-smartphone/tablet sides of the business. I think that concern is more than priced in at the current quotes. Revolution Investment rating: 8/10

Q’s:

• Excellent work so far on rough circumstances. I am a long time apple investor and I was wondering how you be playing the options for this.
• Opinion on playing AAPL now that it’s around 420? Wait for a pullback or jump into some Calls?
• Thoughts on aapl options?! thanks
• Oh yes AAPL options, couldn’t have timed it better!!!
• How much of the current premiums in apple call options are, in your opinion, earnings premiums? You think premiums are going to decrease once earnings are out for AAPL.

A: Regarding AAPL options and trading here. The fact that I’ve been asked dozens of times in the last 48 hours for my opinion about buying AAPL options now that the stock is at 52-week highs is enough alone to keep me from adding to it right now. Holding the AAPL calls I was buying and telling you guys about back when it was $40 lower than the current quote or whatever.  Revolution Investment rating for Apple common (which I own, along with calls that I bought lower): 8/10

Q: Cody, your thought on MT and any advice for studying short term trading strategies with example like a book or any web site links, Appreciate it very much A: MT – I’ve seen a lot of great storage/archive services companies come and go over the years. In fact I was hired by the same people who broke Comdisco when they sold it Redline networks or whatever it was called at the time for like $200MM while redline was losing $50mm a year. This QTM is likely another one we’ll see go at some point in the next few years. I’d stay away from it. Revolution Investment rating: 2/10  As far as sites that can help, off the top of my head, I’d suggestWallStreetAllStars.com where you can read the real-time trading ideas and commentary from some of the Street’s best professional money managers.

Okay, guys, that’s it for today. As a famous Beatle once said, “I’ve got blisters on my fingers!” Man, that was a lot of typing. So I’ll see you back here for the chat next week and I’ll have some trading updates to send out exclusively to you dear subscribers of TradingWithCody.com as usual in just a bit too.  Thanks for joining the chat today and thanks for subscribing!

And be sure to check out my Revolution Investing Newsletter published here on Marketwatch.

Cody Willard writes Revolution Investing for MarketWatch and posts the trades from his personal account at TradingWithCody.com. At time of publication, Cody was net long Apple, Google and Corning and net short WFC.

Other than one very strangely angry comment on my blog yesterday (from someone who I would guess was a Netflix long and in a lot of pain and taking it out on me because I wrote about Netflix) I continue to get a lot of great feedback and click thrus on these “must-read articles” every day.  So here are five more must-reads for today along with some quick commentary from me on each.

Former Fox Business Anchor Rebecca Diamond joins WallStreetAllStars.com – My dear friend and ex-co-anchor from our old long-time #1-on-the-network-rated NWS Fox Business’ Happy Hour show is back in action along with me on WallStreetAllStars.com.  Good luck, Gogo!

Home Forecast Calls for Pain – I recently bought some incredibly beautiful ranch land in New Mexico for 70% off where it was listed in 2007. And even though I used to mock Ben Bernanke and others who used to say that “all real estate is local and that since we’d never had a national real estate down turn that there’s no way we ever would”…well, I do think real estate is again mostly local. Buy smart and/or buy something you plan to own forever and don’t worry about what the “economists, builders and mortgage analysts” think will or won’t happen.

Bill Black: Why do Banking Regulators bother to Conduct Faux Stress Tests? - I’ve interviewed Bill Black many times over the years and it’s remarkable to me how he is kept marginalized by the powers-that-be in the government just twenty years after he helped clean up the S&L in a constitutionally-acceptable manner. And as he and the comments to his article allude — the banks remain insolvent.  I’ve just added a new short to the Revolution Investing model portfolio in the sector in addition to the existing very, very profitable shorts in Lender Processing Services LPS and Wells Fargo WFC we’ve already had in the sector.

From Apple to Vudu: 8 Netflix Alternatives Compared – Wired answering the question that seemingly every Netflix NFLX customer is asking himself/herself: “What alternatives to this Netflix and its dwindling library are there?” And would you be shocked if I spoil the article for you and just tell you that Amazon AMZN and Apple AAPL offerings top the list?  Two incredible companies and success stories that have played out in front of our eyes. I’ve got both Apple calls and common that I’ve added to during August’s crashes and back before the last quarter’s earnings report.  And I owned in my hedge fund Apple from the very bottom at $7 to $160 (sold it to become a TV anchor). I still think it’s a must-own. Amazon’s great too, though I don’t own it and kick myself for missing much of its move over the last decade.

Red Alert on the Red Metal? - Very interesting analysis about copper looking toppy (coppertop? Too obvious, sorry.) from the always very interesting Bruce Krasting. I continue to wait to get short the GLD ETF and SLV ETF in size and Bruce has me looking at a basket that include copper ETF, the JJC, too now. Even though he explicitly says he’s not recommending a short in copper.  Read the article, it’ll make you think.

And finally I’ll note that I’ll be meeting the subscribers of my independent service, TradingWithCody.com, in our chat room (TradingWithCody.com/chat) at 2pm EST today for another “Stocks-only chat” where they can can ask me about any stocks they want and I’ll give a full fundamental and trading analysis on each in real-time.  If you’d like to join in today’s chat, you can sign up for a free one-week trial of the service by clicking here.

Cody Willard writes Revolution Investing for MarketWatch and posts the trades from his personal account at TradingWithCody.com. At time of publication, Cody was net long Apple, Google and net short LPS, Wells Fargo.

Here’s what I’m reading today and what I’m thinking about each topic.

Wall Street All-Stars on Netflix – I’m kicking myself for not having gotten short this thing after it cracked last week. The newsflow had turned negative, the stock chart was busted and that stupid letter from the CEO was the kicker. And I’d written about how I’d turned from bull to bear for you guys here yesterday, but didn’t pull any triggers. Darn it.

Early Look: Italy Downgrade Priced In – I’d been mocked when I’d repeatedly mocked the unimportance of the Italy/Greece-contagion fears.  Turns out, as the headline reads, that the markets had indeed already priced in the Italy/Greece-contagion fears.  Indeed, it had more than than priced it in back during those August panics when we’d been buying tech common and calls. Take a look at a chart of the SPY, the DIA or especially the QQQ and you’ll see some very nice rallies.

Like the sign says, speed is just a question of money – Which leads me to this link, a link to my article here on Marketwatch today — I’m trimming and selling after having been a buyer during those panicky August lows.

AT&T Launches Ad Blitz in DC to Push T-Mobile Deal – I don’t believe for a minute that this deal isn’t going to get done. The entire pushback from the DoJ looks like one big charade to me.  I guess AT&T doesn’t want to take any chances though.

U.S. Probes Rating-Cut Trades – The ratings agencies are riddled with a conflict-of-interest business model in which they’re paid by the banks to rate the junk the banks create.  The ratings agencies have no credibility among anyone with a brain cell but because they’ve gotten stamped by the government as credible, they reap billions in fees.  And it sure looks like a lot of really rich people made a lot of really big money with the inside information that this ratings agency was going to cut the US debt.  People want to break McGraw-Hill up. I say just shut S&P down already.

Here’s some of what I’m reading this morning along with my thoughts on each topic.

Gold Heading Higher Is A Certainty – I am a gold bear, but not short yet.  Jay’s got a catalyst for gold coming up that I’d not considered, but the trend is up, and I’m not fighting it.

Near-term trading strategies from the Wall Street All Stars – In the Platinum Conversation on the home page of WallStreetAllStars.com, I asked the other contributors how they’re standing right now and if they’re making any new moves. Quite a few bulls. Guys liking tech, including RIMM, Priceline, Amazon and Google and Apple. But nobody’s buying right now. Is that bullish or bearish?

Indicator Update 9/18/11 – I like to follow Jeff Miller’s economic commentary because he filters through a lot of the nonsensical economic indicators and trends to try to end up with some sort of meaningful near-term and longer-term economic conclusions.  His leaning bearish for the very near-term and I can’t argue against that much just now, especially after last week’s big rally taking us to some new highs in a lot of our stocks, I’m not a stomping bull as much as I was a during August’s big crashes.

UBS raises loss estimate to $2.3B and Obama seeks $3 tln in cuts – Lost in all this discussion about yet another rogue trader at yet another brokerage/bank/conglomerate is the fact that US taxpayers are spotting these UBS traders the entire nut they’re trading with. Obama and the Republican/Democrat Corporatist Regime he fronts is looking for billions of dollars in cuts to social security and food stamps and so on, even as UBS remains on welfare. Remember this? “Federal Reserve data showing UBS AG and Barclays Plc ranked among the top users of $3.3 trillion from emergency programs is stoking debate…” Short the banks, welfare-funded trading won’t last much longer.

An Explanation and Some Reflections – I know a few folks over at Netflix, including Reed Hastings, the CEO and author of this strangely apologetic but still arrogant “reflection” and I can’t tell you what the heck he’s doing with this. I didn’t think the DVD and streaming pricing changes that Netflix put through a few months ago was that big of a deal. But if he thinks the revolt from the customers over this issue is about him needing to communicate better and not about the pricing and the lack of decent stream-able content on the site…then he’s got another thing coming. And changing the shipping service to Quickster (Qwikster? Qwixter? What was the new name of the DVD service again?) is not exactly clarifying much of anything. I’d have thought Netflix would be tempting after this big pullback, but as I wrote the other day (see Revolution Investment ratings for Akamai, F5, Netflix and six others), “There’s not a lot of cash for the company to work with so they’ve got to execute perfectly. That raises the risks.” Netflix has not been executing the last few months and that’s going to keep me on the sidelines.

And be sure to check out my Revolution Investing newsletter, published here on Marketwatch.

Cody Willard writes Revolution Investing for MarketWatch and posts the trades from his personal account at TradingWithCody.com. At time of publication, Cody was net long Apple and Google.

I got a lot of great feedback about my “Revolution Investing Must-Reads” links column on Monday, so I’m going to start doing these links-with-Cody-commentary columns more often.  Here’s what I’m reading today and a few thoughts about each headline:

Bicycle Stability Versus Table Stability - My old friend David Merkel wrote this piece back in 2007 and republished it today…because it’s just as relevant in the current economic set up as it was back then. As David puts it in his reprint summary: “Is this still true today, 9/14/2011?  Yes.  Yields are rising for low quality companies, and falling for high quality companies.  Analyze your portfolio and see what companies could survive for two years without raising capital.  This is an environment where a company that has to raise capital could find the doors shut.”

Japan puts ex-spokesman in charge of nuclear crisis – I’ve been worried that one of the next so-called Black Swan events that could roil these markets could end up being yet another re-run of recent past Black Swan events.  More to the point, is it possible that we’ve overlooked just how bad the damage and ongoing fallout over the Fukushima disaster is and will get?  Yes, of course. That said, (first, my heart continues to go out to all the people affected by this tragedy) the market would likely panic on any such new developments from the Fukushima disaster but that such panic would probably be a buying opportunity as it was last time.  And finally in regards to this headline — does the fact that the Japanese Prime Minister if putting a spokesman in charge of the crisis a good sign or a bad sign?

Bank Of America: ‘Phase I” Of Cost-Cutting Will Eliminate 30000 Jobs and UBS To Layoff 3500‎ – Banks and bank profits are way too big as a percentage of history, as I’ve outlined several times before (see How to fight the bank bailouts and profit while doing so, for example).  These are not the last of the big lay offs from the big banks that we’ve spent trillions propping up only to see them eventually shrink to size anyway.

Broadcom’s acquisition makes it a buy –  What does Netlogic make that Broadcom wants so badly? “Netlogic’s products are designed into various systems, such as switches, routers, wireless base stations, access aggregation, radio network controllers, security appliances, networked storage appliances, service gateways, and connected media devices offered by original equipment manufacturers.” You know, that whole App/Smartphone/Tablet/Cloud infrastructure thing we’ve been investing in.  This won’t be the last 50% pop in this sector.  Hopefully we’ve got the next one on our sheets already. (See exactly what stocks I’m investing in at TradingWithCody.com, by the way.)

At TechCrunch Conference, Talk of a Bubble – Been a while since we saw talk of “Talk of a Bubble” in the headlines. As usual, I’d much rather be on the other side of the worries in the headlines and if they’re still worried that tech’s already in a bubble…I’d consider that very bullish for tech.  Oh, and by the way, anybody else notice that Amazon, Priceline, Apple and several other of those old “bubble stocks” are much higher than they were back in those “bubble days” anyway?

Oh, and I’m doing a special “Stock questions only” Q&A with subscribers of TradingWithCody.com today at 2pm EST.  You can get a free one week trial signing up here if you’d like to ask me to analyze a specific stock for you today.  I’ll give each stock I analyze a Revolution Investment rating on a scale from 1 to 10.  See you there!