It's been nearly a month since Bitauto (BITA) tumbled after posting mixed quarterly results, and two weeks ago, I decided to buy into the online provider of content, marketing, and financing services for the automotive industry. I didn't nail the bottom. The stock went on to hit new 52-week lows on Wednesday.

The fast-growing Chinese internet platform operator became a market darling a few years ago, attracting the attention and pocketbooks of some of China's largest dot-com darlings. The country's leading search engine Baidu (BIDU -1.78%), internet messaging giant Tencent (TCEHY -0.44%), and online retailer (JD 0.36%) became investors in Bitauto, and retail investors followed. After watching Bitauto for a couple of years, I finally invested late last month, taking advantage of the stock's pullback. Let's go over the reasons why I bought into Bitauto.

Auto convention show floor in China.

Image source: Bitauto.

1. Growth remains strong

Last month's quarterly report was a mixed bag. Revenue soared by a better-than-expected 54%, with top-line growth in all three of its businesses. Bitauto's advertising and subscription, digital marketing solutions, and transaction services categories rose 18%, 49%, and 116%, respectively. The biggest growth here is coming from its auto financing segment, and since that's a lower-margin business it resulted in adjusted earnings climbing just 26% for the period. However, Bitauto landed ahead of Wall Street forecasts on the bottom line, too. 

Guidance is where Bitauto got tripped up last month. Bitauto is targeting 37% to 41% in gross revenue growth for the quarter that concluded last week. The market was holding out for a stronger showing. I get how a stock performs relative to expectations, but at the end of the day, we're still looking at a company that continues to grow its business at a healthy clip.

2. Big investors offer validation and buyout potential

It was two summers ago that Bitauto went on my radar, just as Baidu, Tencent, and initiated or increased their stakes to 3.2%, 7.1%, and 23.5%, respectively. All three of those companies wanted some more skin in the online auto-buying market, and it was comforting to know that they chose to buy into Bitauto instead of taking it on directly. 

Another welcome byproduct of the investments is that it should provide some degree of downside protection. If Baidu, Tencent, and thought that Bitauto was worth loading up on when it was $20.23 two years ago, doesn't this make the now larger and more polished Bitauto a tempting buyout candidate as the stock falls back to that original investment price? Lesser Chinese dot-coms have been bought out or taken private in recent years, and Bitauto has to be near the top of the list of potential buyout targets at this point. 

3. Bitauto is cheaper than you think

Bitauto is coming off three years of operating losses, but it's actually pretty profitable on an adjusted basis. The stock is trading at less than 11 times this new year's projected earnings and commanding an enterprise value that is less than three times revenue. Look out a year to 2019 and the earnings multiple drops to eight. 

There are a lot of things that can go wrong, and it's not fashionable right now to buy Chinese growth stocks in light of the trade war that's afoot. However, China will always be compelling over the long haul given how the world's most populous nation is still early in the online migration cycle.