3.44$ stock seems to be a deep value play. Tangible book is near at 1.85. Already earning .41 for 2023 and expected to earn .49 in 2024, IQ has a forward earnings yield of over 14%. In addition to low Price to earnings, the growth potential expected is over 20% to as 38%.
Plotting out the growth to 2029 and using optimistic growth stock multiples, a stock like IQ could be worth between 47 and 94 dollars using PEG (price to earning growth) valuations of 1x growth and 2x growth.
That being said, thats the rosy optimistic case, there is also a very bad bear case that recognizes china is in a deflationary real estate down spiral and also surrounded by geopolitical risk. Some economists mention potential currency devaluation to factor the deflation issues in real estate overbuild.
This is a high risk stock. I will use small position sizing and use in the money call options to reduce risk. Controlling the risk at entry and making sure the position is small is how catastrophic damage to accounts is prevented.
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IQ long calls deep in the money have been working after positive earnings.
Thanks for analysis! But is this the real Chinese version of Netflix or just a streaming service side player that could easily disappear? Is it well known in the Chinese / Asia market?
optionfarmers
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@luxerich, "iQIYI is currently one of the largest online video sites in the world, with nearly 6 billion hours spent on its service each month and over 500 million monthly active users", was a spin off from baidu who still owns a stake.
RIckAshby
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Great call optionfarmers. Just goes to show that the company is totally under the radar of most people. Price is a touch above $5.00 now, thinking about adding to holding, price has broken up though the bearish channel, big move quickly so it may pull back short term? Record net inflows of investment have just gone into China. What do you think ?
optionfarmers
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Im mostly a bear, but this risk to reward case keeps staring me in the face.