Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, Chinese search giant (Nasdaq: BIDU) has received a distressing two-star ranking.

With that in mind, let's take a closer look at Baidu's business and see what CAPS investors are saying about the stock right now.

Baidu facts

Headquarters (Founded)

Beijing (2000)

Market Cap

$54.6 billion


Internet information providers

Trailing-12-Month Revenue

$1.64 billion


Co-Founder/Chairman/CEO Yanhong Li
CFO Jennifer Li

Return on Capital (Average, Past 3 Years)



$1.59 billion / $41.7 million


Google (Nasdaq: GOOG) (Nasdaq: NTES) (Nasdaq: SOHU)

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 14% of the 4,677 members who have rated Baidu believe the stock will underperform the S&P 500 going forward. These bears include All-Star GundersonGroup, who is ranked in the top 15% of our community, and oeustice.

Just last week, GundersonGroup cautioned Fools about bidding up for Baidu:

Double top. Chinese and US traded internet firms are already showing signs of weakness. I expect BIDU stock to be drug down in sympathy with an acceleration of downward price action as confirmation of the top is visible to more and more market participants.

In fact, Baidu currently sports a lofty forward P/E of 39.1. That represents a clear premium to rivals like Google (14.8), NetEase (12.8), and Sohu (15.4).

CAPS member oeustice elaborates on the Baidu bear case:

Pressures on the Chinese economy (inflation) are forcing the government to act to constrain growth. This will contribute to a potential drop in demand for advertising. Also concerned about corporate governance. Reports of Chinese tax structures, multiple sets of books and overall lack of transparency makes me bearish on Chinese tech with high P/E.

What do you think about Baidu, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!  

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of Baidu, Google, NetEase, and Sohu. The Fool owns shares of Google. Try any of our Foolish newsletter services free for 30 days.

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