Is it time to buy Alibaba?
That’s the question posed by the popular investment newsletter, the Motley Fool, published in Yahoo Finance. The author of the piece, Anders Bylund, notes that the NYSE-listed Chinese e-commerce giant “is on a roll” and “the company is crushing Wall Street’s expectations in the COVID-19 lockdown era,” with share prices roaring 64% higher over the last 52 weeks.
So, Bylund asks: “Is it too late to jump aboard Alibaba’s skyrocketing bandwagon or is the stock still a buy?”
A few choice cuts from the piece below:
Alibaba’s sales rose 30% year over year to $21.8 billion in August’s first-quarter report. Earnings increased by 15% to $2.10 per share. The results breezed by Wall Street’s consensus estimates, which had pointed to earnings near $1.98 per share on approximately $21.3 billion in top-line revenue.
On the earnings call, CEO Daniel Zhang noted that the COVID-19 pandemic accelerated Alibaba’s business in many ways. Consumers are doing more shopping online and enterprises rely on cloud computing resources like the Alibaba Cloud platform to an unprecedented degree…
Alibaba is expanding its operations outside Chinese borders, including a deep interest in starting direct e-commerce operations in the United States. Political tension between Washington and Beijing is making that ambition difficult to pursue right now but investors should keep this expansionist agenda in mind for the long haul.
In the meantime, there’s a real risk that the Trump administration might take action to obstruct Alibaba’s business on American soil. According to a recent report in the Chinese newspaper Global Times, Chinese analysts worry that the U.S. government might block Alibaba’s semiconductor development efforts and cloud computing services ahead of the election in November…
Buying Alibaba shares is a direct bet on the Chinese economy, in the long run, magnified through the lens of booming e-commerce and cloud computing operations. The stock is also fairly affordable, trading at just 30 times trailing earnings and 25 times forward estimates. That adds up to a solid buy. Some investors might prefer Pinduoduo or JD, but Alibaba offers the best balance between risk and long-term rewards, in my opinion.
For the full piece, go here