As of 3/30/2018,
Short Pain Bot’s two official stock picks for the next ten years are
- BIDU ($223.19 on pick date)
- FB ($159.79 on pick date)
We like Baidu (NASDAQ:BIDU) because it’s a stock loaded with catalysts that’s trading at under 20 times forward earnings.
In our opinion, we believe Baidu will capture enough of China’s autonomous driving market that its stock will pay enormous rewards for the investors who have a long time line. According to Research and Markets, global demand for autonomous vehicles will increase by an average of close to 40% a year to almost $127 billion by 2027. With China being the largest auto market in the world, we estimate autonomous vehicle in China will amount to at least $30 billion by that time. While Baidu doesn’t have plans to manufacture cars by itself, we believe it will make substantial high margin highly-recurring cloud-based revenues that will make a huge impact on Baidu’s bottom line. We also note that the Chinese government has given Baidu a major boost by preventing foreign companies from making high-quality digital maps that are very important for autonomous driving. The government has also given Baidu a designation that could make local Chinese companies more likely to work with Baidu on autonomous driving.
In terms of specific catalysts, Baidu’s CEO has said it wants to list back in China. Chinese tech valuations can be substantially higher, and the listing could help Baidu break out of its technical downtrend. Baidu’s autonomous driving efforts have also made substantial progress, with the company recently winning a license to test its cars in parts of Beijing.
As for FB, we like Facebook because it’s an essential internet utility that has been unfairly discounted due to the recent privacy controversy. We believe Facebook (NASDAQ:FB) will bounce back and the company will continue to grow.