Many times, companies go through times of crisis before, eventually stepping back out stronger than ever. These events lead to multiple investors losing faith in the company and pulling their shares out. However, if the company reverses the negative trend it’s stuck in, investors who keep their shares have the potential to make a large return on their investment.
One of the best metrics used to decide whether a company is a “growth” stock or not is to use analyst price targets. These price targets, which are generally a year out, define what analysts believe are suitable price ranges for said company. A relatively high price target means the company will see considerable growth in the stock price, making it a worthy investment. Here are three China stocks to buy based on my analysis.
Alibaba Group Holding (BABA)
Alibaba Group Holding (NYSE:BABA) is a Chinese multinational conglomerate specializing in e-commerce, cloud computing, digital media and logistics. It operates platforms like Taobao and Tmall, offers cloud services through Alibaba Cloud and provides digital payments via its affiliate, Ant Group’s Alipay.
BABA stock is currently trading at $73.67, with a market cap of $178.4 billion. It has gone down 56% in the past 5 years. Despite this decline, analysts predict a target price estimate of $107.51 — suggesting a potential growth rate of 46% over the next year. The company maintains positive financials, with a profit and operating margin of 8.50% and 13.35%, respectively. Additionally, an operating cash flow of $183 billion is also a positive indicator.
Alibaba has strong growth prospects, with the group just introducing its first AI programmer, powered by its proprietary large language model (LLM). Additionally, Apple (NASDAQ:AAPL) has added Alibaba, along with JD.com (NASDAQ:JD), to one of the apps used on their Vision Pro, launching in China on June 28. These advancements position BABA as a compelling China stock to buy on the dip, with strong potential for future growth and innovation.
JD.com (JD)
JD.com is a Chinese e-commerce giant providing a wide range of products, including electronics, apparel and groceries. Known for its robust logistics network, JD.com ensures fast, reliable delivery and also offers services like JD Logistics, JD Health and JD Cloud.
The stock is currently trading at $28.10, with a market cap of $43 billion. It has gone down 19.5% in the past years. Despite this decline, analysts predict a target price estimate of $42.51 — suggesting a potential growth rate of 51% over the next year. It has consistently beaten EPS predictions, with an average surprise of 17.5% over the past year. Multiple financial institutions have rated JD stock as Overweight and Outperform.
The stock has been profitable and has crossed revenue of $1 trillion for the past two years. Plus, recent expansions — like adding four new 737-800 Boeing Converted Freighter (BCF) aircraft to its fleet — indicate strong growth prospects. A high potential growth rate and resilient financials make JD.com a definite China stock to buy on the dip.
PDD Holdings (PDD)
PDD Holdings (NASDAQ:PDD) operates a multinational e-commerce portfolio, including Pinduoduo and Temu marketplaces. It connects businesses and consumers digitally, offering diverse product categories like apparel, electronics and more. The company generates revenue through commissions and fees from sellers on its platforms.
PDD stock is currently trading at $143.86 with a market cap of almost $200 billion. The stock is down 4% this month, but I expect this negative trend to reverse at any time. Analysts have predicted a one-year target price estimate of $202.64, indicating a growth potential of 40.8%.
A year-on-year quarterly earnings growth of 245.60%, combined with the fact that this stock has consistently beaten EPS predictions over the past year, underscores its strong operational performance.
As e-commerce continues to expand globally, particularly in emerging markets, PDD is well-positioned to capitalize on this growth trajectory. In Q1 2024, the Temu app boasted 167 million monthly active users globally, a significant surge from 23.4 million users in Q1 2023, marking a remarkable 614% year-over-year growth. This explosive growth, combined with positive analyst feedback and stellar financials make PDD a stock to buy, especially on the dip.
On the date of publication, Achintya Pasricha did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
