If I were to tell you that Wall Street expects revenue and earnings growth of 34% and 39% next year for a company, would you be interested? And how about if the company had almost $17 per share in cash and currently traded a lowly 13.7x next year's estimated consensus estimates? Would that further pique your interest?
If you said "heck yes," your answer would be the same as mine. Well, the name you want is the Chinese Internet company Qihoo 360 Technology (QIHU). It currently trades at 13.7x estimated consensus earnings of $4.83 per share for 2016 and at 19x estimated consensus of $3.47 per share for 2015. The company has about $1.6 billion or $17 per share in cash on hand as of the March 2015 quarter as well.
Just hitting the wires is a go-private proposal from the company's Chairman, together with a few venture capital firms, for the paltry sum of $77 per share. Even a back of the envelope calculation will give you at least $125 to $150 per share, depending on growth rates assigned and using an appropriate range of discounted rates.
So, even now I say, buy QIHU, it's dirt cheap even after the ridiculously low offer.
Over the next several weeks, I will write a series of articles on these undervalued Chinese companies that are trading in the U.S. In my view, they should either receive similar take private offers from management teams and their VCs or delist off our exchanges and list in Hong Kong or even mainland China, where the valuations are far more generous and the government incentivizes them "return home," so to speak.