Summary
- Investing legends like David Tepper, Ken Griffin, Ray Dalio, Jamie Dimon, and Warren Buffet are bullish on Chinese stocks, particularly Alibaba (BABA).
- Alibaba's diverse business segments and strong technical indicators signal a promising investment, with a 33.64% gain since 7/29.
- Alibaba boasts a market cap of $242 billion, a P/E ratio of 13.30, and expected revenue growth of 10.30% this year.
- Analysts are generally positive, with 18 strong buys and a consensus price target of $109, despite inherent China risks.
Today's Chart of the Day is a little bit different than most of my posts. This morning before the market open I was watching CNBC Squawk Box and heard David Tepper say Buy Everything In China. In the past few weeks I heard the same thing in interviews with Ken Griffin, Ray Dalio and Jamie Dimon. Even Warren Buffet has dipped his toe in the water and bought Chinese auto maker BYD (BYDDY) . Who am I to go against the wisdom of these investing greats? Let's start looking at some of the individual Chinese leaders starting with the Chinese Internet retailer Alibaba (BABA) . Since the Trend Seeker signaled a buy on 7/29 the stock gained 33.64%
Alibaba Group Holding Limited, through its subsidiaries, provides technology infrastructure and marketing reach to help merchants, brands, retailers, and other businesses to engage with their users and customers in the People's Republic of China and internationally. The company operates through seven segments: China Commerce, International Commerce, Local Consumer Services, Cainiao, Cloud, Digital Media and Entertainment, and Innovation Initiatives and Others. It operates Taobao and Tmall, which are digital retail platforms; Alimama, a proprietary monetization platform; 阿里1688 and Alibaba.com, which are online wholesale marketplaces; AliExpress, a retail marketplace; Lazada, Trendyol, and Daraz that are e-commerce platforms; Freshippo, a retail platform for groceries and fresh goods; and Tmall Global, an import e-commerce platform. The company also operates Cainiao Network logistic services platform; Ele.me, an on-demand delivery and local services platform; Koubei, a restaurant and local services guide platform; and Fliggy, an online travel platform. In addition, it offers pay-for-performance, in-feed, and display marketing services; and Taobao Ad Network and Exchange, a real-time online bidding marketing exchange. Further, the company provides elastic computing, storage, network, security, database, big data, and IoT services; and hardware, software license, software installation, and application development and maintenance services. Additionally, it operates Youku, an online video platform; Quark, a platform for information search, storage, and consumption; Alibaba Pictures and other content platforms that provide online videos, films, live events, news feeds, literature, music, and others; Amap, a mobile digital map, navigation, and real-time traffic information app; DingTalk, a business efficiency mobile app; and Tmall Genie smart speaker. The company was incorporated in 1999 and is based in Hangzhou, the People's Republic of China.
Barchart's Opinion Trading systems are listed below. Please note that the Barchart Opinion indicators are updated live during the session every 20 minutes and can therefore change during the day as the market fluctuates. The indicator numbers shown below therefore may not match what you see live on the Barchart.com website when you read this report.
Barchart Technical Indicators:
- 100% technical buy signals
- 39.87+ Weighted Alpha
- .33 - 60 month Beta
- 22.30% gain in the last year
- Trend Seeker buy signal
- Above its 20, 50 and 100 day moving averages
- 10 new highs and up 28.51% in the last month
- Relative Strength Index 80.92%
- Technical support level at $102.56
- Recently traded at $105.07 with 50 day moving average of $82.21
Fundamental Factors:
- Market Cap $242 billion
- P/E 13.30
- Dividend yield 2.74%
- Revenue expected to grow 10.30% this year and another 8.60% next year
- Earnings are estimated to increase 4.60% this year, an additional 12.00% next year and continue to compound at an annual rate of 1.27% for the next 5 years
Analysts and Investor Sentiment -- I don't buy stocks because everyone else is buying but I do realize that if major firms and investors are dumping a stock it's hard to make money swimming against the tide:
- Wall Street analyst gave 18 strong buy, 29 buy, and 1 hold opinion on the stock
- Analysts' price targets are between $80 and $133 with a consensus of $109
- Value Line give the stock its average rating of 3 and comments: " Artificial intelligence products and services have plenty of runway over the pull to late decade. As part of the Cloud Intelligence Group, AI-related growth was more than 100% year over year in the fiscal fourth quarter."
- CFRAs MarketScope rates the stock a hold and comments: "Our Hold reflects our view of improving fundamentals, partly offset by inherent China risks. "
- MorningStar rates the stock an average 3 star rating with Fair Value at $100 and comments: "Alibaba is currently undervalued, in our view, underpinned by our 10-year adjusted EBITA compound annual growth rate forecast of 3%."
- 520,620 investors monitor the stock on Seeking Alpha
Additional disclosure: The Barchart Chart of the Day highlights stocks that are experiencing exceptional current price appreciation. They are not intended to be buy recommendations as these stocks are extremely volatile and speculative. Should you decide to add one of these stocks to your investment portfolio it is highly suggested you follow a predetermined diversification and moving stop loss discipline that is consistent with your personal investment risk tolerance and reevaluate your stop losses at least on a weekly basis.
On the date of publication, Jim Van Meerten did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
