Shares of Sohu.com (SOHU) moved mostly higher today, following a beautiful, classic bottoming tail formation on the chart yesterday. Bottoming tails are significant bullish signals that you should always look out for. This reversal in trend is major sign for technical traders, as the Chinese stock is trading at multi-year lows.
While the chart shows that the stock is setting up for a nice surge back to $17.35 in the near-term, it is particularly intriguing to note its total cash per share of $47.97. To state this clearly, the stock is trading at $13.50 while it has a total of $47.97 in cash per share. To put this another way, the market cap of Sohu.com is $530 million while it has $1.88 billion in cash. Based on these metrics alone, this stock is a screaming buy! Just in the near-term, I have an upside target of $17.50. Likely achieved within a month.
Sohu.com is a marketing/media company in China. Sentiment has gotten way too negative on this sector partly because of the China slowdown, but also because of the on-going trade war. As most analyst will tell you, the trade war will likely be over before the US presidential election in 2020. In addition, the amount of stimulus thrown at the Chinese economy by the Chinese government has been huge. This will start to trickle down into business spending. At the current valuation, Sohu.com makes a ton of sense as a bottom play with significant upside potential.
Take a look at the chart, it is one that any trader who understands the basics of chart reading will love to own!
Disclosure: Chief Market Strategist, Gareth Soloway of InTheMoneyStocks.com owns shares of Sohu.com (SOHU).