Baidu (BIDU +0.88%) keeps raising the bar.
Shares of China's leading search engine hit another 52-week high today. This isn't an all-timer, though: Baidu traded as high as $165.96 two years ago. But it certainly wouldn't be a surprise if Baidu did wind up working its way up through that ceiling. The stock has soared 53% this year, and it's just 7% away from establishing a new all-time high.
Baidu is also cheaper than it was in summer 2011, the last time it traded this high. This doesn't mean that the stock is cheap: China's reborn dot-com darling trades at a hefty 25 times next year's projected profitability. But the point with Baidu is that it's growing substantially faster than that.
Analysts see revenue soaring 41% this year and 32% next year. This kind of heady growth may come as a surprise to those who figured Qihoo 360's (QIHU +0.00%) arrival with a search engine of its own last summer would eat into Baidu's growth.
It may have. Market-share metrics reveal that while most of Qihoo 360's growth has come at the expense of smaller platforms, Baidu has taken a small hit. But the arrival of a worthy rival -- even if Qihoo 360's commanding less than 15% of the market -- has actually been beneficial to Baidu. Qihoo 360's security software and popular browser have drawn more of China online, and that has gotten advertisers to spend more to generate Internet leads. The number of marketers on Baidu has increased, and so has the amount of money that they spend on the search engine.
Then again, it's not as if Baidu is the only fast-moving dot-com hitting fresh 52-week highs. Youku Tudou (NYSE: YOKU) is also trading at levels last seen during the same summer that Baidu peaked.
Youku Tudou is China's leading video website, a distinction that was cemented when Youku completed its merger with Tudou. Profitability has been elusive. Streaming video requires heavy bandwidth and licensing costs. This will never be the high-margin turf that Baidu dominates. But analysts finally see Youku Tudou turning a profit next year. As a scalable model, things can start to improve dramatically after that.
China has come back into fashion with growth investors. Quite a few of the country's most prolific growth stocks posted double-digit percentage gains last week, and the rally may not be over if we go by Baidu, where the forward earnings multiple is still a discount to its current growth rate.
China's rolling and Baidu's going along for the ride.
