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Buy Baidu Inc (ADR) (BIDU) Stock as it Moves Past Its Biggest Headwind

While many of its peers have rallied over the past few years, Baidu Inc (ADR) (NASDAQ:BIDU) stock has just been flat. That gives BIDU stock an interesting setup heading into its second-quarter earnings report, which is due after the market closes on Thursday.

One of the market’s biggest storylines over the past several years has been the boom in Chinese internet stocks. As the China urbanization story spilled into a China digitization story, China’s internet-related markets have just exploded. This includes markets which are largely developed in the United States, like e-commerce, digital advertising and social media.

In fact, over the past three years, JD.Com Inc(ADR) (NASDAQ:JD) and Alibaba Group Holding Ltd (NYSE:BABA) are each up about 60%. Meanwhile, Tencent Holdings Ltd (OTCMKTS:TCEHY) has surged 140% higher in that same time frame.

But there have been no such gains for BIDU stock over the past three years. In fact, the Chinese internet search giant is down about 12% in that time frame.

Why? Well, the company’s growth story was unhinged in early 2016 after it found itself at the center of a tragic online advertising controversy. Since then, growth has...