Tomahawk, WI 08/20/2014 (Basicsmedia) – Baidu Inc. (ADR) (NASDAQ:BIDU) continues to surprise especially on the internet space that has in the recent past been made of headlines from the likes of Tencent’s WeChat and Alibaba. Baidu is arguably one of the best stocks in terms of its upside according to Bloomberg’s, John Dawson, having surged by 8,000% since 2005, a mark that Google Inc. (NASDAQ:GOOG) on its tenth anniversary cannot match as it has been up by 1000%. The company also commands decently priced earnings at 40x PE.
Baidu Inc. (ADR) (NASDAQ:BIDU) stock still commands a huge growth potential at the back of the Chinese industry that still has low penetration levels of about 42% according to Head of China technology research at Standard Chartered Plc, Wendy Huang, in an interview on Bloomberg.
“I think still even after so many years; Baidu is still a high growth stock in the overall internet universe. So especially for the next year that we actually expected the company to enjoy more than 50% earnings growth,” said Mrs. Huang.
A major challenge for the company is the fact that its earnings mostly depend on China, compared to other search companies such as Google Inc. (NASDAQ:GOOG), which cover huge market landscape around the globe. Search earnings especially on Desktops also continue to be the biggest play for the company taking into consideration the fact that Google has expanded its portfolio into Android that currently runs most of the smartphones in the world.
Huang remains confident that Baidu Inc. (ADR) (NASDAQ:BIDU) is still making impressive steps in tapping into the mobile search space as it tries to play catch-up with Google on the same platform. Competition continues to be the biggest challenge according to Wendy especially with companies like Alibaba, Tencent and 58.com Inc (ADR) (NYSE:WUBA) constantly on a rally to increase their market share especially in China.
“[…] I would say yes a few years ago no one really expected Tencent Market Cap can be so big today. […]I would say the China’s internets space and new players like this year we have lots of very hard internet companies like Dianping 58.com Inc (ADR) (NYSE:WUBA). So I would say the new players and disruptive technology can always be the potential threat for Baidu that’s why Baidu Inc. (ADR) (NASDAQ:BIDU) can never stay complacent,” said Huang.