Over the past two months, I've been throwing stocks away on a weekly basis. With the Olympics coming, I might as well theme this week's column for the Beijing Games. 

Don't worry. It's not all venom. I follow up every diss with three reasonable alternatives to replace the equity given the heave-ho from your portfolio. There's a lot of love in my malcontent heart.

I decided to go after a fan favorite this time, but I'll spell out my reasons. It is one of China's most beloved dot-com stocks, but it's also vulnerable.

Who gets thrown out this week? Come on down, Ctrip.com (NASDAQ:CTRP).

Go for the gold, settle for the silver
China's leading online travel agency has been a growth stock darling until peaking two months ago. Shares have fallen by more than 40% since. What's going on? Isn't the Chinese economy is booming? It sure is, growing at annualized clip of 10% over the past few years. Won't more money mean more people in China get the travel bug? They sure will: The World Tourism Organization estimates that 100 million Chinese citizens will travel abroad come 2020, from 34 million just two years ago.

However, Ctrip's valuation has always been rich. It can't show any signs of mortality. As fate would have it, the upcoming Olympic Games may not be the slam-dunk PR win for China they hoped for. Forget the protests and boycotts. Have you seen the air pollution? Some athletes may even wear masks. In short, this is unlikely to be the postcard from Beijing that China imagined when it landed the blockbuster athletic event.

A Ctrip bull may counter that the Olympics are immaterial. Ctrip is a play on China's own citizenry of 1.3 billion booking flights and hotels within the country. That is absolutely true, but a lot of Mr. Market's interest in Ctrip has been on China's arrival into the mainstream and it looks as though it may blow its late summer close-up.

There is also the problem with pricing. Ctrip's valuation may be more attractive today than it was when it peaked in May, but it's still not cheap. Ctrip is trading for nearly 40 times this year's profit target, just as growth is decelerating and analysts are gradually whittling away at their guesstimates. Just as hotelier Home Inns & Hotels (NASDAQ:HMIN) came crashing to a more reasonable market multiple, Ctrip has succumbed to gravity lately.

Unlike Home Inns, Ctrip has an enviable streak of topping analyst estimates. If that continues, go back into the dumpster and pull this one back out. However, the market may not get excited about Ctrip until after the Olympics move on and the company can prove its merit. You may not want to wait when your money can be working for you elsewhere.

Good news
As I have every week, I don't talk down a stock unless I have three alternatives that I believe will outperform the company getting the heave-ho. Let's go over the three fill-ins.

  • eLong (NASDAQ:LONG) - Like clockwork, eLong proves itself to be Ctrip's ugly little sibling. The smaller search portal is growing slower than Ctrip and can't grasp the concept of profitability. However, eLong does happen to have a beauty of a balance sheet with $6.29 a share in cash. For investors more worried about the floor than the ceiling, eLong is attractive trading just above its greenery. Yes, eLong offers a flawed version of Ctrip, but with a net.
  • AirMedia (NASDAQ:AMCN) - If Ctrip gets people to book more flights, AirMedia will be there to cash in. The company runs an advertising network through several Chinese airports, making it the ideal portal and airline agnostic play on Chinese travel. Why choose between Ctrip or eLong -- or China Eastern Airlines (NYSE:CEA) or China Southern Airlines (NYSE:ZNH) -- when you can ride them all? If more people travel, advertisers will pay more to be seen. More importantly, AirMedia doesn't come with Ctrip's rich valuation. AirMedia is actually growing earnings faster than Ctrip, but is trading for just 26 times this year's estimates and a mere 16 times next year's projected profitability.
  • Shanda Interactive (NASDAQ:SNDA) - China's economic renaissance isn't just about the travel bug nibbling harder. China's youth is also smitten by the leisurely pursuit of hitting up the local Internet café and playing an online role-playing game. Shanda pioneered the online gaming space, was dealt a temporary setback, and is back on a growth tear. Value hounds will warm up to the fact that Shanda is trading for less than 12 times this year's earnings guesstimates. Shanda has also beaten Wall Street's expectations in each of the past eight quarters. Yes, Ctrip has done that, but not with a forward earnings multiple in the pre-teens.

Invest carefully and don't forget to separate your trashed stocks from ones that can be recycled.

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