Bargains Galore in Asian Stocks

Lost in all the noise this week about higher bond yields and lower stock prices in the southern part of the Eurozone, was good news about a new Chinese stimulus program.

It won’t be massive like the infrastructure-heavy stimulus package China launched in 2008. But the Chinese government is launching a series of specific measures, including project approvals, tax incentives and special subsidies, to bolster growth.

That’s good for us, too, as shareholders of a number of Chinese companies. The outlook here remains promising.

For instance, China Mobile (NYSE: CHL) said at a shareholder meeting two weeks ago that it’s currently in talks with Apple to offer the iPhone on its network. The company’s proprietary TD-SCDMA 3G network has hampered a deal to date. But this shortcoming can be worked out.

In fact, China Mobile already had 10 million iPhone users with limited compatibility in October – and it’s adding more than 1.25 million more a month.

With China nearing almost a billion mobile phone users – including 665 million with China Mobile alone – this is a huge opportunity for both companies. A formal announcement would give both stocks a shot in the arm. Keep buying. (Also, I’m adjusting our sell stop to $48 to reflect the fact that our shares went “ex” a $1.125 dividend on May 16.)

Melco Crown (Nasdaq: MPEL) has tumbled over the last three weeks but there hasn’t been any negative news on the casino operator. Indeed, earnings estimates for this year and next have only risen over the last 30 days. The stock is a bargain at current levels.

Chinese computer gamer NetEase (Nasdaq: NTES) also remains attractive. Last quarter’s earnings jumped 28% on a 31% increase in revenue. The company is likely to earn $5 a share this year and almost $6 in 2013. That’s exceptional growth and the stock is unusually cheap at only 12 times this year’s earnings estimate.

The recent price action in Qihoo 360 Technology (NYSE: QIHU) is a bit of a mystery. Last week it reported that in the March quarter earnings skyrocketed on a 202% spike in revenue. It also offered a positive surprise when it estimated that revenue would more than double again in the current quarter. Yet the stock ran into profit taking for some reason, perhaps getting swept up in the technology sell-off that has resulted from Facebook’s botched IPO. However, I see no fundamental change in Qihoo.

A few weeks ago, India’s HDFC Bank (NYSE: HDB) reported strong first quarter results with 30% earnings growth based on a whopping 55% increase in retail loans. Expect this trend to continue. New branches are up 28% over the last year to 2,544 in 1,400 cities. And with the bank now focused on small towns and rural areas there’s plenty more room for growth here.

And yesterday Yanzhou Coal (NYSE: YZC) demonstrated just how quickly things can change when sentiment improves toward Asian stocks. China’s leading coal producer rose almost 7% on more than twice normal volume.

I see plenty of sessions like that ahead for the high-quality Asian stocks below.

If you have any questions, feel free to call one of our VIP Trading Services representatives at 888.570.9830 (toll-free) or email: viptrader@oxfordclub.com, or call Pillar One Advisor Rick Pfiefer at 800.438.3040 or 407.667.4729.

Current Portfolio:

Stock: Yanzhou Coal (NYSE: YZC)
Country: China
Current Price: $16.82
Comments: Buy. Sell stop is $13.

Stock: Melco Crown (Nasdaq: MPEL)
Country: Hong Kong
Current Price: $12.21
Comments: Buy. Sell stop is $11.

Stock: Qihoo 360 Technology (MUSE: QIHU)
Country: China
Current Price: $20.00
Comments: Buy. Sell stop is $18.

Stock: NetEase (Nasdaq: NTES)
Country: China
Current Price: $60.10
Comments: Buy. Sell stop is $50.

Stock: New Oriental Education (NYSE: EDU)
Country: China
Current Price: $27.22
Comments: Buy. Sell stop is $23.

Stock: HDFC (NYSE: HDB)
Country: India
Current Price: $28.71
Comments: Buy. Sell stop is $27.

Stock: Dr. Reddy’s Laboratories (NYSE: RDY)
Country: India
Current Price: $29.92
Comments: Buy. Sell stop is $28.

Stock: China Mobile (NYSE: CHL)
Country: China
Current Price: $50.84
Comments: Buy. Adjust sell stop to $48.