Is Now a Good Time to Invest in Baidu?

Baidu, Inc. (Nasdaq: BIDU) is a Chinese Web services company headquartered at the Baidu campus in Beijing's Haidian District. While the company offers more than 57 different Web services, it is best known as China's Internet search giant, similar to Google. As of June 2015, the company averaged over 1 billion site visitors a month.

While the company has received a lot of acclaim since its inception in 2000, its stock price on the Nasdaq has taken a dip in 2015. As of August 7, 2015, Baidu is trading at a value of $176.08 per share, down from over $233 at its 2015 high in January. Since that high in mid-January, the company has faced a volatile stock price that has declined steadily to its current levels.

The company remains strong, highlighted by year-end 2014 revenues of $49 billion, operating income of $12.8 billion, total assets of almost $100 billion, total equity of $52.61 billion and 40,500 total employees. The 2015 dip provides interested investors with a good opportunity to buy in at a favorable price. However, there are several reasons why Baidu remains a strong investment in 2015, even with the current dip.

Baidu's Similarity to Google

Baidu has become the Google of China. The company started as an Internet search company that was able to integrate itself within the hard-to-reach Chinese infrastructure. Due to China's strict laws on technology, foreign investments and the entry of foreign companies, Baidu, a Chinese company, was able to dominate the Chinese search market, just as Google dominates the Western search market.

In addition to its search capabilities, Baidu offers over 50 additional services and products, also very similar to Google. The company's additional products and services include an collaboratively built online encyclopedia and a searchable discussion forum.

High Projected Growth in 2015The company's search function and additional offerings has made it the number-four ranked site in the world as of March 2015, according to Alexa Internet rankings. If Baidu can maintain a similar trajectory to Google, it will be a great investment in the long term.

Baidu is much cheaper than Google in terms of overall market cap. With its projected growth in 2015, it makes it an attractive investment for interested investors.

Baidu is expected to achieve 41% growth in its market cap in 2015, according to The Street. Google is expected to have similar market cap growth in 2015, but at a much larger valuation. Baidu remains a more attractive investment.

Of course, projections are not set in stone. The company may achieve more than a 41% growth in market cap, or it could underperform its projected growth. Investors should do their own due diligence prior to investing in Baidu.

Access to Large Chinese Markets

Baidu currently owns over 50% of the entire Chinese search market, with over 600 million active users. Mandarin is also the world's most widely spoken language by population, with over 1 billion native speakers.

This provides Baidu with an incredible market that can still be tapped. With the so-called Great Firewall of China, Baidu is naturally protected from foreign competition.

Baidu's Sound Acquisition Strategy

Baidu, like Google, knows that innovation is the key to growth. While it innovates on its own, as its development of the Minwa supercomputer has demonstrated, it also innovates through acquisition.

In 2014, Baidu purchased Peixe Urbano, a Brazilian shopping portal with more than 30,000 merchants, and 99Bill.com, an online payments service provider. In addition, the company has invested in a mapping software manufacturer called Indoor Atlas and Pixellot, a sports revenue production startup. All of these companies should increase Baidu's yearly revenue, making it a strong investment prospect.

Source: http://www.investopedia.com