Older Chinese stocks like Baidu (NASDAQ:BIDU) and NetEase (NASDAQ:NTES) have proved their staying power. Now, a couple of younger ones hope to follow their lead.
58.com (NYSE:WUBA) more than tripled in price from its Oct. 31 IPO at 17 a share, surging 246% to a March 7 high. From there it pulled back to start shaping its first true basing pattern and is still working on the handle with a 57.60 buy point. Volume has been light along the handle, a bullish sign.
Shares leapt 14% on June 26 — helping build the right side of the base — amid news that Chinese Internet giant Tencent (OTCPK:TCEHY) took a 19.9% stake in 58.com for $735 million.
Beijing-based 58.com, known as the Craigslist of China, turned its first annual profit last year with EPS of 25 cents. Analysts expect that to nearly double to 46 cents this year, followed by a 124% gain to $1.03 in 2015.
The company’s 98 Composite Rating is tops in its 31-stock Retail-Internet industry group.
Tarena International‘s (NASDAQ:TEDU) stock didn’t take off right out of the starting gate like 58.com’s. Instead, it dipped into a consolidation after its April 3 debut, then cleared a 10.90 buy point on June 12 in above-average trade.
It rose as much as 31% from the entry, triggering the eight-week hold rule, before easing again. This week, it’s rebounded off its 10-week average after finding support at the line.
Stocks sometimes offer a secondary buy opportunity during their first two pullbacks to the 10-week line after a breakout. But volume is still light in Tarena. Heavier turnover would show more conviction behind the rebound.
Tarena, also based in Beijing, operates learning centers in 33 major Chinese cities. It broadcasts lectures live to the centers so all students in a given course have the same instructor. The company is expected to grow annual per-share earnings by 64% this year and 59% the next.
The company is the biggest provider of professional information technology education in the country. It’s the latest Chinese educator to come public. Others include TAL Education Group (NYSE:XRS) (in October 2010), China Distance Education Holdings (NYSE:DL) (July 2008) and New Oriental Education & Technology (NYSE:EDU) (September 2006).
The Consumer Services-Education group has been lagging, but TAL and Tarena hold its best Composite Ratings.