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I just sold 45 Netease (NTES) @ 24.89. Why did I? May 14, 2008

Posted by deminvest in China stock, growth stock, Internet stocks, investment, nasdaq, Nasdaq stock, NTES netease.com, Single stocks, stock I own, stocks.

Netease is a great company:

  1. NTES has honest P/E ratio: Trailing P/E:18.38, forecasted to get even better: Forward P/E (full year 31-Dec-09): 17.45
  2. Netease enjoys nice growth: Quarterly Revenue Growth (yoy):7.60%, Quarterly Earnings Growth (yoy):21.70%
  3. NTES has a plenty of cash $596M, about 25% of its $3B market cap
  4. Netease will come out next week with earnings that are expected to be nice.

Then why did I sell such a nice stock?

  1. Because it hit my 40% target,
  2. Because I want back my invested $1066 that I spent in September 2006 when I bought 60  Netease shares at $ 17.77 each
  3. Because, by selling 45 NTES  at 24.89 each I made $1120, so I made $60 cash
  4. Because now I can keep 15 NTES shares that are free.
  5. Because this is my “Free stocks strategy” and I like it.

Let’s try to learn from this good move by looking back to when I bought NTES:

It was a good move that did beat the NASDAQ as I can see from this chart.

Why did I chose Netease? Let’s cut and paste from the post I wrote as I took the decision:

  • growing fast
  • booming dot com in Chinese exploding Internet market,
  • low P/E around 16,
  • coffers full of cash.

Those are basically the reasons why I’m still saying Netease is a nice company. What happened to it is that, as earnings went up about 40% in this year and a half, its stock price had to go up about the same amount to keep the P/E figure reasonable.

I will keep my 15 NTES shares (hopefully) forever because they are free and I will look for companies with similar good numbers to make a few more 40% up!


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