Baidu.com, Inc. (ADR) (NASDAQ:BIDU)

CAPS Rating: 4 out of 5

Baidu is the leading Chinese-language Internet search provider.

Recs

7
Player Avatar Raphael1990 (93.81) Submitted: 1/24/2013 7:29:03 PM : Outperform Start Price: $89.29 BIDU Score: +107.90

I've heard the bearish case for this one, but it is just too cheap to say "No".

Yes there is competition. However you can afford to share the cake with others when the cake gets so much bigger every year. Especially when you are already looking for more cake in Africa, Brazil and the Middle East.

And when I see people make ridiculous general assumptions like "It's Chinese so it cant be as good as it looks like" I have to question the judgement of those people, because the risk of Baidu or other Chinese companies with good reputation turning out to be a fraud exists. But it is about as high as Apple being ruined because an exploding IPhone killed someone. So when you happend to be afraid of those tiny possibilities you might have to consider not investing at all.

Member Avatar Raphael1990 (93.81) Submitted: 2/22/2013 10:19:45 AM
Recs: 2

Looked cheap when I bought it for my real money portfolio at 96$ and looks even cheaper now at 88$ and judging by what we have seen happening to Chinese companies and fallen tech angels in the past I wouldnt be surprised to see it going below 80$ in the short term. Im actually hoping for a second purchase opportunity below 80$ at this point and the analysts shouting "SELLL!" make me really optimistic.

And just a little reminder for those who dump BIDU now (probably at a significant loss): You don't outperform the market with perfect companies with no competition or uncertainty involved. You outperform the market by buying companies that are far from perfect. Companies that are significantly undervalued based on a conservative valuation with compelling risk/reward scenarios.

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