4 Reasons Baidu.com, Inc. (ADR) (BIDU) Is Bottoming Out: Qihoo 360 Technology Co Ltd (QIHU), Google Inc (GOOG)

3. Baidu.com, Inc. (ADR) (NASDAQ:BIDU) is even cheaper than Google Inc (NASDAQ:GOOG) now
Google Inc ( NASDAQ:GOOG) is a great company, but it’s growing at a much slower clip than Baidu. Back out its revenue-padding Motorola Mobility acquisition, and Google revenue grew at half of Baidu’s rate.

However, Google Inc ( NASDAQ:GOOG) is trading at more than 15 times next year’s projected earnings. Is Google worth that kind of premium? Absolutely. However, Baidu should be commanding an even healthier multiple.

The only other major pure play in search — Russia’s Yandex NV (NASDAQ:YNDX) — is also growing slower than Baidu.com, Inc. (ADR) (NASDAQ:BIDU), and it’s fetching 18 times next year’s bottom-line forecast. Yes, Yandex is another great online investment. It should beat the market from here. However, Baidu has some serious ground to make up on both of these companies — and it will.

4. China is still growing faster than the balance of the world
You want exposure to China. It’s easy to hear about KFCs in China that post negative comps or Chinese companies that warn of sequential revenue declines for the current quarter, but this is still an economy growing at roughly 8% annual clip.

It’s worth noting that the sequential dip — a decline that will include Baidu — is a seasonal factor that’s made worse by the late start of the Chinese New Year this time around. China’s economy is already growing at two to three times the rest of the developed world, and it’s still early in the online migration cycle.

Baidu also has some growth initiatives brewing outside China, for those who don’t want to put all their eggs in one restrictive government’s basket, but China itself is a market that’s dying for a bounce.

Good luck with that Baidu short. You’re going to need it.

The article 4 Reasons Baidu Is Bottoming Out originally appeared on Fool.com and is written by Rick Munarriz.

Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Baidu, Google, and Yandex and owns shares of Baidu and Google.

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