Flying under the radar can have its benefits. Consider Chinese Internet stock Tencent.

Tencent isn't too well-known outside China, but it should be. The market capitalization of its Hong Kong-listed shares is nearly $36 billion, almost twice the size of more famous Chinese Internet companies such as Baidu.

Within China, Tencent is at the heart of online life. Its instant-messaging service, QQ, has 568.6 million user accounts open. The company is behind several of China's most popular online games. The low fees it charges users mean revenue holds up even in downturns.

It has just delivered first-quarter net profit up 71% year-to-year. Of course, this will slow as scale increases. Already, revenue growth from instant messaging lagged new account additions. New games may not do as well as past blockbusters.

But such quibbles are minor for a company that is in a sweet spot. China has nearly 400 million Internet users now, with huge potential growth. With a cash balance of almost $1 billion and low debt, Tencent has the firepower to take advantage.

Investors will do well to keep an eye on how that cash is spent. Ample resources can offer temptations for poor investment. Tencent may find an opportunity in Internet search, given Google's recent problems, but its platform has less than 1% of the market.

Tencent's relative anonymity outside China has helped keep its valuationrealistic: The stock is priced at 28 times forward earnings, below its average valuation in the past five years, according to data provider Starmine. Tencent deserves some exuberance, and right now it is within the realms of the rational.

Andrew Peaple