Value stocks are poised for another strong year. The core reason is that companies with stable free cash flows, strong balance sheets, and an established competitive moat are better equipped to handle an economic downturn than businesses focused on growth at all costs.
In the United States, ‘Amazon’ and ‘online shopping’ are virtually synonymous. It makes sense.
‘The Zon’ accounts for approximately 40% of domestic e-commerce sales — and that’s after the pandemic pushed both national retailers and mom-and-pops alike to invest heavily in digita
Data is believed to be the oil of the 21st century, fueling a revolution into absolutely complex and wonderful industries like artificial intelligence (A.I.), clean energy engineering and development and even insights into more effective healthcare. I mean look at the record-bre
The recommendations of Wall Street analysts are often relied on by investors when deciding whether to buy, sell, or hold a stock. Media reports about these brokerage-firm-employed (or sell-side) analysts changing their ratings often affect a stock's price. Do they really
Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.
Michael Burry, made famous by the 2015 movie "The Big Short" is a widely known investor whose main focus is - according to a quote by the book and movie - "... find value wherever it can be found."
Well, looks like our Burry has found value in China of all places despite current
Below is Validea's daily guru fundamental report for ALIBABA GROUP HOLDING LTD - ADR (BABA). Of the 22 guru strategies we follow, BABA rates highest using our Price/Sales Investor model based on the published strategy of Kenneth Fisher. This value strategy rewards stocks with lo
Investors looking for stocks in the Internet - Commerce sector might want to consider either Alibaba (BABA) or Amazon (AMZN). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
Michael Burry is capturing headlines recently for predicting another stock market crash. The popular investment manager has been vocal on social media telling investors to sell their stocks and take a defensive position. It's interesting to look at how Burry has constructed his p
In such volatile financial markets, TipRanks provides investors with tools that can help them choose and compare different stocks. One such tool is the TipRanks
Smart Score, which indicates whether a stock is likely to outperform the markets.
Using this unique tool, we’ve looked up two stocks that are currently displaying the “Perfect 10” score - Alibaba (
NYSE:BABA
) and Walt Disney (
NYSE:DIS
). In the past three months, both stocks have outperformed the 3.3% rally in the S&P 500 (
SPX
) and less than 1% in the Dow Jones Industrial Average (
DJIA
).
Let’s discuss these stocks in detail.
Alibaba Group Holding Ltd.
Based in China, Alibaba is a provider of e-commerce and technology infrastructure services. A regulatory crackdown, delisting concerns, and the COVID-19 outbreak in China impacted the stock’s performance last year. Nevertheless, the company stands to benefit from strong domestic demand for its cloud business and focus on diversifying its non-internet business.
The recent 13F filings of several hedge funds show an increase in holdings of Alibaba stock, reflecting their confidence in the company’s future performance. Scion Asset Management’s
Michael Burry and Appaloosa Management’s
David Tepper have added 50,000 and 10,000 shares of the company, respectively.
Is BABA a Buy or Hold?
Alibaba has a Strong Buy consensus rating based on 16 unanimous Buy recommendations. Further, the average price target of $138.53 implies 34.4% upside potential.
Besides for analysts, hedge funds have maintained a positive outlook on
BABA stock. Our data shows that
hedge funds bought 2.2 million shares of the company in the fourth quarter. Bloggers and retail investors are bullish on the stock as well.
The Walt Disney Co.
Walt Disney is a leading international entertainment and media enterprise. It produces and distributes television and motion picture content, operates theme parks, resorts, and cruise lines, and also offers streaming services.
The company recently announced an encouraging
restructuring plan to boost profitability. It involves the reorganization of its business into three segments, with each unit’s leader having full operational control. Furthermore, the streaming business continues to remain a top priority for the company.
Just like BABA, the stake in DIS stock was also increased by some of the ace investors. Soros Fund Management’s CEO
George Soros increased his stakes in Disney to 189,600 shares, while Trian Fund Management’s
Nelson Peltz started a new position in the stock.
What is the Price Target for DIS Stock?
Turning to Wall Street,
DIS stock has a Strong Buy consensus rating based on 19 Buys and three Holds. The average price target of $129.15 implies an upside potential of 22.04%.
The stock also has a positive signal from hedge funds. Our data shows that
hedge funds bought about 8.2 million shares of the company in the last quarter. Bloggers are bullish on the stock as well.
Ending Thoughts
In a nutshell, DIS and BABA are well-established names in their respective industries. Both stocks have the maximum Smart Score on TipRanks, implying they are more likely to beat the broader market averages.
Stay abreast of the
best that TipRanks’ Smart Score
has to offer.
Disclosure
For Immediate Release Chicago, IL – February 16, 2023 – Today, Zacks Investment Ideas feature highlights GameStop's GME, JD.com JD, Alibaba Group BABA and MGM Resorts MGM.
Below is Validea's daily guru fundamental report for ALIBABA GROUP HOLDING LTD - ADR (BABA). Of the twelve guru strategies we follow, BABA rates highest using our Price/Sales Investor model based on the published strategy of Kenneth Fisher. This value strategy rewards stocks wit
Alibaba (BABA) has recently been on Zacks.com's list of the most searched stocks. Therefore, you might want to consider some of the key factors that could influence the stock's performance in the near future.
The easing of restrictions following stringent lockdowns sparked improved sentiment about
Chinese stocks in 2023. However, Chinese stocks could get adversely impacted by rising political tensions between the U.S. and China, with both countries accusing each other of flying spy balloons. Keeping in mind these dynamics, using
TipRanks’ Stock Comparison Tool, we placed Alibaba (
NYSE:BABA
), XPeng (
NYSE:XPEV
), and JD.com (
NASDAQ:JD
) against each other to pick Wall Street’s favorite Chinese stock.
Alibaba (NYSE:BABA)
A regulatory crackdown, the resurgence of COVID-19 in China, delisting concerns, and growing competition in the e-commerce space weighed on Alibaba shares last year. In Q2 FY23 (September 2022 quarter), cloud segment revenue growth slowed down to 4% compared to 10% in Q1 FY23, adding to investors’ concerns.
Nonetheless, Wall Street is optimistic about Alibaba’s long-term potential in the e-commerce and cloud computing markets as well as growth prospects in the artificial intelligence (AI) space. Several analysts expect the company’s financials to improve in the upcoming quarters as macro pressure eases.
Is BABA a Good Stock to Buy?
Recently, Benchmark analyst
Fawne Jiang reiterated a Buy rating on Alibaba with a price target of $180. Alibaba is scheduled to report its December quarter results later this month. The analyst expects retail and e-commerce growth to remain subdued in the December (Q3 FY23) quarter.
Jiang slightly raised Q3 FY23 revenue estimates to RMB 244.9 billion from RMB 244.6 billion. He also increased his Q3 FY23 adjusted EBITDA forecast to RMB 52.5 billion from RMB 51.5 billion to indicate better-than-anticipated cost controls. Jiang expects inflection in the June quarter (Q1 FY24), with reaccelerated growth projected in FY24.
Overall, Alibaba earns the Street’s Strong Buy consensus rating based on 16 unanimous Buys. The average
BABA stock price target of $138.53 suggests about 33% upside potential.
BABA shares have moved up by over 18% in 2023.
XPeng (NYSE:XPEV)
Like many other electric vehicle (EV) makers, XPeng was also hit by production and supply chain issues due to China’s strict COVID-19 restrictions. Moreover, competition in the Chinese EV market is growing rapidly. XPeng delivered 120,757 vehicles in 2022, marking a 23% increase year-over-year but significantly lagging the initial target of 250,000 deliveries.
Moreover, XPeng disappointed investors by starting the year on a weak note. Its
January deliveries came in at 5,218 vehicles, reflecting a decline of nearly 60% year-over-year and 53.8% month-over-month. The company blamed the seasonal slowdown during the Chinese New Year holiday period, which began in mid-January, for the weak numbers.
Last month, CEO He Xiaopeng told
Bloomberg News that the company has pushed back its profitability goal and now expects to deliver an operating profit in 2025 compared to its price target to break even by late 2023 or early 2024. The company is focusing on full self-driving technology to achieve its profitability goal. XPeng is also streamlining its manufacturing to improve efficiency and control costs.
XPeng’s profitability over the near term is expected to be impacted by the ongoing price wars triggered by Tesla (
NASDAQ:TSLA
). Following Tesla, XPeng also announced price cuts on some of its models to boost volumes and stay competitive. XPeng’s performance might improve in the quarters ahead due to its upcoming launches and expansion into Europe.
What is the Target Price for XPeng Stock?
Several analysts have downgraded XPeng over recent months. This week, Macquarie analyst
Erica Chen downgraded XPeng to Sell from Hold.
Wall Street’s Hold consensus rating for XPeng is based on seven Buys, three Holds, and four Sells. The average
XPeng stock price target of $11.72 suggests 24.2% upside potential.
Shares are down 5% year-to-date.
JD.com (NASDAQ:JD)
JD.com is one of the leading online retailers in China and also has a presence in logistics, fintech, and healthcare markets. Despite COVID-led headwinds and macro pressures, JD.com’s Q3 2022
revenue growth accelerated to 11.4% from 5.4% in Q2 2022. Higher sales and a focus on efficiency helped the company in generating
better-than-expected earnings.
Looking ahead, JD is seeking growth in new AI-based applications and recently announced that it plans to launch a
ChatGPT-like product.
What is the Forecast for JD Stock?
Mizuho Securities analyst
James Lee expects December 2022 quarter to be “soft” for the Chinese internet space, given the impact of COVID-19 on business activity and consumer sentiment. Nonetheless, Lee pointed out that his firm’s early checks from late December through the Chinese New Year holidays “have been increasingly positive,” as indicated by solid consumer discretionary spending.
Lee expects JD’s Q4 2022 revenue to rise 7.5% year-over-year. He projects the net margin to improve by 60 basis points to 1.9%, driven by higher efficiency in core e-commerce and cost controls on new investments. The analyst expects revenue to resume double-digit growth starting Q2 2023.
Lee called JD and Baidu his top picks and expects both companies to gain market share from regulatory policies and a competitive environment. The analyst reiterated a Buy rating and raised the price target for JD stock from $82 to $85.
All in all, JD scores Wall Street’s Strong Buy consensus rating based on 10 Buys and one Hold. The average
JD stock price target of $85.36 suggests 63.2% upside potential.
Shares have declined 7% since the start of this year.
Conclusion
A rebound in business following the reopening of the Chinese economy is expected to improve the prospects for Chinese companies. However, U.S.-China tensions and macro pressures could impact the pace of recovery. Currently, Wall Street is more bullish on JD.com and sees higher upside potential in the stock compared to Alibaba and XPeng.
Disclosure
Artificial Intelligence stocks have been surging on the back of the hype surrounding ChatGPT, the viral AI chatbot that reached 100 million users in just two months.
Alibaba (BABA) closed at $104.79 in the latest trading session, marking a +1.1% move from the prior day. This move lagged the S&P 500's daily gain of 1.15%. Elsewhere, the Dow gained 1.11%, while the tech-heavy Nasdaq added 11.35%.