It is time once more to open a trade. We’ve been on a tear recently but unless we manage to close out a trade this week, next Monday will unfortunately not have a new position. Today, we decided to go back to buying a Chinese web company, despite the fact that Shanda Entertainment, like the rest of the Chinese market, has suffered greatly so far in 2010. The trick here was simply seeing the P/E ratio of Shanda compared with its growth, which is still very high. Compare that to Knot, which as you can see with the traffic chart below has not been knocking the ball out of the park recently and looks like it might have another tough quarter in it.
You can take a look at the comparison between the two stocks here:
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My major concern with this stock of course is that like any other Chinese stock, I have limited knowledge over Shanda’s dealings. Specifically, how well is its traffic growing, are its products keeping up to par with the competition. I did do some research and found nothing worrying in that regard but it is always a concern of course.
The Knot is an intriguing stock no doubt. The company is heavily specialized in everything related to weddings and has certainly been hit by the recent economic tough times. Not only are less people getting married but more importantly, those that who are getting married are a lot more careful with all expenses keeping them to a minimum.