I'm buying CHINA

The world is upside down. Back in the bubble days CHINA would go up thousands of percentage points just because of its name: chinadotcom Corp. Now it almost seems the stock has the plague. Just look at what this FOOL says:

«Mistake No. 3: Buying the hype
China is growing wildly and presents incredible opportunities. Satellite radio is the next mass communications medium. XM Satellite Radio (Nasdaq: XMSR) is a big player. The BlackBerry handheld is incredibly popular, and Research In Motion (RIMM) is one of the most innovative companies in the world. The Internet revolution will seem like a blip compared to what's going to happen with nanotechnology.

All that's true. But that doesn't mean you can simply buy Chinadotcom (Nasdaq: CHINA) because it has "China" and "dotcom" in its name and expect to make a fortune. Mighty Amazon.com (Nasdaq: AMZN) remains one of the most successful at cashing in on the Internet revolution. Yet investors who bought at the highs lost more than half their money.»

Let me try to explain my point of view. CHINA is down 96% from its peak and its name is still associated with hype and craziness of bullish investors. Investors have already payed for their mistakes of the bubble days (oh they sure did), there's no point in talking about the past all the time ... ChinadotCom is a name for a company like any. Except this one presents a great buying opportunity

Taking a look at technicals on a semi-log chart:

Big volume, big breakout. It even had already made a successful retest of the broken trendline:

The stock was coming down because of a negative expectation for its earnings:

«Shares of CDC (CHINA:Nasdaq - commentary - research) were among technology's losers Thursday, falling 11.8% after the company posted a big drop in first-quarter earnings.

The company, formerly known as Chinadotcom, posted pro forma earnings of $1.2 million, or 1 cent a share, on sales of $56.2 million. One analyst had been looking for earnings of 3 cents a share on sales of $54 million, according to Thomson First Call. A year ago, the company reported pro forma earnings of $6 million, or 6 cents a share, on sales of $35.5 million. Shares traded down 34 cents to $2.55.»

Sales are growing rapidly and I believe that's far more important than earnings for an internet company. Like I said in the title of this post, I'm buying CHINA at tomorrow's open.

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