We are bullish on Baidu (NASDAQ:BIDU) because it has registered high margins and asserted its dominance in China's search engine market. High growth rates for the next five years are expected by the market. The company's strong performance is reflected in its top and bottom lines. Catalysts that can move Baidu's stock are Internet penetration in China and growth in the SME market and online revenue advertising.

Baidu is a Chinese web service company that has dominated the Chinese search engine market in the last several years. Its dominance in the Chinese market has been increasing over the years; its market share by the end of Q2 2012 was around 78.6%, followed by Google (NASDAQ:GOOG) with 16%.

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Source: Techinasia.com.

The Chinese search engine market in Q2 2012 grew by 26% quarter over quarter and 62% year over year. Along with the overall growth in the Chinese market, Baidu has also been able to grow its market share over the years. In the last five years, sales and earnings have grown by 77% and 85% per annum, respectively.