After Baidu's Recent Beating, Is the Stock a Buy?

Now that the stock's come down a bit on some short-term concerns about Baidu (BIDU 0.93%) and the economy in China as a whole, is the stock a buy today? Regardless of your short-term view on the Chinese economy, there may be opportunity in Baidu (aka the "Chinese Google (GOOGL -0.34%)").

Brendan Byrnes: Hey, folks, I'm Brendan Byrnes and I'm joined today by our tech and telecom analyst for Fool.com, Andrew Tonner.

Andrew, let's take a look at Baidu, the dominant Chinese search engine. Recently beat up after earnings, that multiple is steadily coming down. Is this a buying opportunity?

Andrew Tonner: It absolutely is. You look at this company and if you turn off the stock market, turn off the noise of having to hang a price on these shares -- you look just at the numbers -- you would be absolutely thrilled to see a company putting up the kind of growth that they are.

The company still, in its most recent quarter, grew revenue at 42%. They gave guidance that missed Wall Street's median expectation by $6 million, but never mind the fact that that's actually 41% growth. Still, again, for the upcoming quarter.

It's a high-margin business that has a dominant franchise in a growing space, that's trading for a very cheap multiple. If you had to make a checklist for all the things you'd look for in a great play right now, Baidu has them all.

The model we've seen is so successful, basically porting the Google search engine model over into China, but like Google in mobile as well, Baidu is being very proactive.

Keep in mind that, although Android is the dominant operating system in China on mobile, that it's Baidu's search engine that actually powers 80% of Android searches in China. They're also the default search engine now for Chinese iPhones as well.

They're very proactive in the mobile front as well. They dominate their core business of desktop search, and, really, the story here as well is as online advertising spend in China increases, Baidu is going to be the huge beneficiary. They have around 600,000 and potentially 50 million small and medium-sized businesses advertising with them now. As that number increases, it'll be a huge windfall for Baidu.

I like what the company's doing. I think they're probably one of the best plays in terms of a value for growth type company in tech right now. I love them at this price, absolutely.

Brendan: Yeah, I absolutely agree. A lot of room to run, and at this multiple I think you take advantage of a buying opportunity here, short-sightedness by Wall Street.

Thank you, Andrew. Fool on!