I'll Be Buying One of These 3 Stocks Soon

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For well over a year now, I've been doing my best to help the world invest better. You see, every month, I publicly call out a few stocks that I'm considering adding to my Roth IRA; next week, I'll let you know which stock made the cut.

So far, my monthly picks have returned about 6.5%, slightly underperforming the S&P 500 return over the same time frame. Read below to find out what three stocks I'm thinking about buying and why, and at the end I'll be offering up access to a special premium report that digs super-deep into the details of one of the three companies.

Time to hedge a bet?
There's no stock that I've added more frequently to my Roth IRA than Chinese search engine Baidu (NASDAQ: BIDU  ) . And there's good reason for that. The company has a huge first-mover advantage inside the world's most populous country, and many residents are deciding to become regular Internet users.

Through the first nine months of the year, the company has increased revenue by almost 60%. At the same time, earnings per U.S. share jumped 66%. Given this history of recent performance, the fact that the company still has a large Chinese search market-share, and the fact that the stock now trades for just 16 times expected earnings for 2013, I have no problem adding the stock to my list of possible buys for this month.

On the other hand, however, Baidu's stock has been tanking since mid-April, down 35% since then. One of the reasons for this has to do with the fact that the company has been facing increasing competition from upstart Qihoo 360 (UNKNOWN: QIHU.DL  ) . This tiny technology company has come from virtually nowhere to start grabbing significant market share in China in a surprisingly short time frame.

Last quarter, Qihoo's revenue shot up 77%, while earnings rose a more modest 24% as the company invests for its future. Qihoo's standard Internet safety products now have a 95% penetration rate, while its upstart browser has a 65% penetration rate. 

As fellow Fool Rick Munarriz pointed out recently, guidance for the company was also encouraging. Qihoo expects revenue to increase sequentially while rivals like Baidu, SINA (NASDAQ: SINA  ) , and Renren (NYSE: RENN  ) are all calling for sequential dipsheading into the end of the year.

All of these numbers reflect a possible shifting of tides, and it makes me think that adding Qihoo to my Roth portfolio might be a good way to hedge my bets if the company really does replace Baidu as China's behemoth some day.

A pick much closer to home
My final stock for consideration might seem confusing to some Fools: Apple (NASDAQ: AAPL  ) .

Sure, the world's most valuable company has had an amazing run over the past decade, but early this month one Fool pointed out reasons to be cautious about the company: the loss of Steve Jobs' ideas will start becoming more apparent, the company is facing stiff competition, and some key executives just left.

The thing is, I'm the one who wrote that article. So why would I display caution in one article and relative bullishness in another?

It all comes down to context. My earlier article was examining how large I should let Apple become in my hypothetical World's Greatest Growth Portfolio. It has grown to 9%, which I'm not totally comfortable with.

But when it comes to my Roth IRA, I've never purchased Apple before, and a purchase now would represent a much smaller percent of the portfolio. Though there are certainly some cracks in Apple's armor right now, I still think the company represents a best-in-breed business, and it's now trading for just 13 times earnings and free cash flow.

I'll be revealing my pick early next week, but if you're interested in Apple, we've got some required reading just for you.

The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and more important, your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.


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10/24/2016 4:00 PM
AAPL $117.65 Up +1.05 +0.90%
Apple CAPS Rating: ****
BIDU $180.86 Up +4.10 +2.32%
Baidu CAPS Rating: *****
QIHU.DL $0.00 Down +0.00 +0.00%
Qihoo 360 Technolo… CAPS Rating: **
RENN $2.04 Up +0.02 +0.99%
Renren CAPS Rating: *
SINA $77.88 Up +1.59 +2.08%
Sina CAPS Rating: ***