Baidu Keeps Getting Better
At first glance, Chinese Web services specialist Baidu shouldn't be riding as high as it has in recent months. It has come up short against Wall Street's profit targets in three of its past four quarters. The threat of Qihoo 360 remains after it rolled out a rival search engine two summers ago. Investing in Chinese growth stocks is also still a minefield.
However, it's against this backdrop that Baidu has completed the most unlikely and ultimately rewarding of makeovers:
- Revenue growth is accelerating, and Baidu's earlier guidance calls for more of that when the Chinese search leader reports tomorrow after the close.
- Baidu has silenced skeptics who argued that it is too tethered to the PC by making acquisitions through 2013 that beefed up its presence in everything from mobile apps marketplaces to online video to e-commerce.
- The stock, which at one point was down sharply in 2013, managed to soar 77% for the full year. It climbed higher every single month during the latter half of 2013.
Baidu's streak of monthly gains was snapped at six when the reborn dot-com darling stumbled along with the market in January, but February is off to an encouraging start.
Baidu's well-received strategic moves and accelerating top-line growth have turned the online laggard into a leader. However, that can always change after we take in Baidu's fresh financials as analysts fish for clues during the earnings call later tomorrow night.
Qihoo 360 will follow with its own quarterly report next week, and while most of that company's growth will come from its bread-and-butter browser and security software businesses, you can be sure that Wall Street will pry for some color on how the monetization process is going for its upstart search engine that quickly catapulted to second place in China.
Thankfully for Baidu we're talking about Qihoo 360 as a distant silver medalist, but it remains to be seen if they can both continue to post stellar growth without gnawing at one another. The market is bracing for a healthy 2014 from both players, projecting annual revenue growth of 37% for Baidu and 59% for Qihoo 360. That's pretty good for both companies given their respective sizes, but the stocks have come through with huge gains in recent months.
Baidu and Qihoo 360 will have to prove that they are worthy of their market premiums. Baidu gets the first crack at wowing the market with tomorrow night's report.
Baidu and Qihoo 360 may want to get in on this next big thing
Let's face it, every investor wants to get in on revolutionary ideas before they hit it big. Like buying PC maker Dell in the late 1980s, before the consumer computing boom. Or purchasing stock in e-commerce pioneer Amazon.com in late 1990s, when it weas nothing more than an upstart online bookstore. The problem is, most investors don't understand the key to investing in hyper-growth markets. The real trick is to find a small-cap "pure play," and then watch as it grows in EXPLOSIVE lockstep with it's industry. Our expert team of equity analysts has identified 1 stock that's poised to produce rocket-ship returns with the next $14.4 TRILLION industry. Click here to get the full story in this eye-opening report.
The article Baidu Keeps Getting Better originally appeared on Fool.com.Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Baidu. The Motley Fool owns shares of Baidu. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.