Baidu has excellent Q1, but is the stock too high to buy?

I don't know, for such a strong stock, I would have figured that the bottom line would have beaten the analysts by more than two pennies. Let's give Baidu a little credit, however. It has been called the Google (NASDAQ: GOOG) of China by some. Indeed, Baidu is the big force in search in its part of the world.

At the time I was composing this piece, shares were higher by 3.4% in the after-hours session. Not bad considering that Baidu was up over 7% in the regular session on Monday. It will be interesting to see where Baidu closes on Tuesday.

While I think Baidu is doing good business and has a lot of growth ahead of it, I have to ask: can you possibly buy the stock at these levels? That's a difficult question, certainly. It almost comes across as rhetorical, I suppose. I basically am implying that you cannot buy Baidu at such a lofty price. Yet, we all know that sometimes you buy high only to sell higher.

The momentum game can be dangerous, and I think, for most investors, it might be wise to stay away from Baidu. You might lose in terms of opportunity costs, but the cost of buying too high can be much more expensive. Yes, I know, there was a time when you could keep purchasing Google as it rose to incredible valuations and still sell it to the next bidder for a nice profit. I wouldn't want to use that as a reason to buy in this case, however.

So, if you really want to trade Baidu, just be sure you have a stop in place and make certain you buy on the proverbial pullback. To the Baidu fans out there who will say that I don't know what I'm talking about and that Baidu is only heading higher, I say you may be right. Hey, I can recognize an uptrend just as well as anybody. But I'm willing to admit that I don't have the courage to start a position right now.

Disclosure: I don't own any company mentioned; positions can change without notice.