Stock Pick: Searching for a more affordable GOOG? Try Baidu (BIDU)

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Chart showing trailing 12-month performance of Baidu Inc.

While many people still think Google is great name to add to a portfolio, the average stock picker will still have to shell out $1,200 for a single share in the company. If that’s too much, then consider owning Baidu Inc. (NASDAQ: BIDU)—China’s Google—for $178 a share.

On February 25, the company released its fourth quarter results and revenues beat most people’s expectations. Its top line came in at $1.57 billion for the quarter, a 50% year-over-year increase, which was its fastest growth in more than a year.

Its earnings per share of $1.31 were below estimates, but Cheng Cheng, an analyst with Pacific Crest Securities, thinks revenues and EPS will only accelerate thanks to its increased focus on mobile.

George Askew, an analyst with Stifel, upgraded the stock from a hold to a buy because of the company’s rapid growth on the mobile search side.

Mobile accounted for 20% of revenue in the last quarter and it’s buying up competitors—it purchased the 91 Wireless app store for $9.1 billion in August—so that should only increase. Askew think that more than 50% of the site’s search queries will come from mobile in 2014.

Investors would buy Baidu for many of the same reasons they’d own Google. It’s a dominant search engine, its increasing its mobile revenues, it’s innovating into new areas and it’s only growing as more people log on to the web.

“Virtually all search query growth in China is coming from mobile, we believe, and Baidu is capturing the majority,” wrote Askew in a February 27 report. “Investments in mobile search, mobile cloud, location-based services and consumer produces like mobile games are helping to build a moat around Baidu’s business.”

If all goes well, the stock should hit $238 over the next 12 months, says Askew, while Cheng thinks it could top $220.

For more investing insights, follow Bryan on Twitter @bborzyko.

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