Heres Why Im Buying Baidu Inc (ADR) Stock

I'm looking to capitalize on weakness in China's stock market by buying shares of Baidu stock.

Back on May 1st, I wrote an article that created quite the stir. Titled, "Forget Stocks, I'm Hoarding My Cash," it talked about how it'd been an extraordinarily long time since the stock market had a drop of 10% or more otherwise known as a "Correction."

Though we have yet to breach that barrier the S&P 500 was down just 4% from its highs earlier this week several stocks have fallen far enough that it's time for me to dip into that cash stash to make my first purchase. Read below to see why Baidu parent company of China's largest search engine is my choice, and why I think it will be a market-thumper over the long run.

Baidu stock's swoonShares of the Chinese giant reached an all-time high last November when they traded for $252. Between then and this week, Baidu stock lost 28% of its value and bottomed out at $180 earlier this week.

Some of that fall is attributable to the company's earnings reports, which have indicated that revenue is growing far more quickly 50% last year than earnings up 22% over the same time frame. But that's for good reason: the company is investing heavily in both its mobile platform, and initiatives like a closed-loop transaction system that should boost its long-term prospects.

But part of that is also due to the fact that all-things-China have been under extreme pressure lately. After surging more than 60% during 2015, the SSE Composite Index operating out of Shanghai lost one-third of its value in the past month. With the Chinese government panicking to put in ineffective safeguards, some of the largest Chinese stocks listed on American exchanges including China Life Insurance , JD.com , Huaneng Power , and Baidu-competitor Qihoo 360 have suffered.

Source: YCharts. Data for June 12th to July 8th, 2015.

While the underlying fundamentals of these companies have not changed, many American investors fear that a market swoon in China could eventually lead to slower growth of the Chinese economy.

Why I'm not worried about Baidu stockRather than running from the carnage, I think that a drop like this could actually work in Baidu's favor. That's because I consider the company to be extremely "antifragile." For those unfamiliar with the term, Nassim Taleb coined it in his best seller, Antifragile: Things That Gain from Disorder.

Though Taleb doesn't outline a specific checklist for finding antifragile stocks or companies, I formed one loosely based on his writings. To see why I think Baidu would not only survive, but thrive from a slowdown in China, consider the following:

Lots of customers: Baidu had over 524,000 advertising partners as of last quarter. Though some may leave during a slowdown, this type of diversity adds a buffer.
Cash and debt: The company has cash and short-term investments of $9.3 billion, while sporting $4.1 billion in debt. That's more than enough to keep the company running just fine if things go south.
Sustainable competitive advantages: Concrete numbers are hard to come by, but Baidu appears to have captured roughly 85% of all search-market advertising dollars last year. Though Qihoo has proven to be a thorn in Baidu's side, the up-start now lags significantly behind Baidu in mobile.
Skin and Soul in the game: Robin Li founded Baidu, is still the CEO, and owns about 16% of shares outstanding worth over $10 billion. That type of financial and existential skin in the game acts as reassurance that he'll be doing all that he can to make the company a long-term winner.
A great place to work: Baidu has a 4.2 (out of 5) rating on Glassdoor. That's important, as happy and motivated employees are more willing to be flexible during tough times.
Evidence of optionality: Optionality simply means that when opportunities arise, the company is willing to explore them. Baidu is the King of Optionality in China, as it has expanded into local, payment, mobile, and several other areas for growth.

Perhaps most importantly, if advertising dollars really do fall in China, the long-term outcome could be great for Baidu shareholders. Of course, the stock would likely fall in the short-term. But in the process, Baidu could offer its advertising for less, under-cutting opponents like Qihoo and driving them toward insolvency.

In this hypothetical situation, when the advertising market comes back, Baidu would have an even bigger market share and less competition to worry about.

The fact that that type of future is even a possibility, combined with the fact that Baidu stock is significantly cheaper today than it's been in a while, is enough to get me to add shares.

The article Heres Why Im Buying Baidu Inc (ADR) Stock originally appeared on Fool.com.

Brian Stoffel owns shares of Baidu. 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.