Many Chinese stocks are finally regaining momentum after setbacks caused by regulatory and economic headwinds last year. Many of these stocks’ financials and revenue shakiness have turned some investors off. However, selling them may have been shortsighted and the best Chinese stocks are proving that.
These three Chinese stocks are showing some excellent potential coming into this year. Although there are still a few kinks to work out and hurdles to climb over, after weathering the storm and maintaining the standing they have, there is little reason to doubt these companies.
Let’s learn all about these stocks’ current financials, plans for continued growth and why their valuations are too good to pass up this May.
Baidu (BIDU)
Baidu (NASDAQ:BIDU) is a massive Chinese tech company best known for its exceedingly popular search engine, Baidu Search. Its offerings also include software and platforms for cloud services and artificial intelligence (AI). Although Baidu Search is the company’s primary source of income, it is trying to improve its other services and diversify its revenue.
These efforts primarily focus on advertising, mobile services and integrating AI into its cloud software. To understand Baidu’s progress, look at its most recent earnings report. Revenue increased 1% year-over-year to $4,365 million, and net income decreased 6%.
Mobile users increased by 3% year-over-year, and Baidu’s cloud services brought in an additional 6% revenue from Q1 last year. Other departments, such as online marketing and autonomous driving, also grew. While Baidu is performing well, high operating costs and struggles in the fiercely competitive advertising market weigh on income and cash.
Baidu offers an opportunity due to its low valuation and continued investments in promising areas like AI and autonomous driving. It has already displayed its determination to continue making these investments. The company is optimistic that it can maintain a healthy margin and steady growth for years with optimized operational efficiency.
Alibaba Group (BABA)
Alibaba Group (NYSE:BABA) is China’s largest e-commerce platform, with over 900 billion active users last year. Despite its massive platform and excellent long-term performance, Alibaba is trading at a meager price. Alibaba took the full brunt of regulatory crackdowns and restrictions, which slowed the company’s progress but it is not down for the count.
In fiscal 2024, ending Mar. 31, Alibaba reported an 8% increase in revenue and a 9% increase in net income year-over-year. While cash was slightly down compared to 2023, the spread of this revenue growth makes Alibaba an exciting stock.
Alibaba is another company that wears several hats. Its massive e-commerce platform, cloud intelligence and digital media departments all function at total capacity, and all three saw growth in fiscal 2024.
While e-commerce trends almost directly reflect the state of the Chinese economy and consumer spending, the company’s diverse revenue gives it encouraging solidarity. This has allowed it to maintain a steady upward trend despite economic and regulatory challenges.
Alibaba initiated a buyback of $12.5 billion in shares in fiscal 2024 and is returning to the sector’s top. Investors may want to buy while they still can.
JD.com (JD)
JD.com (NASDAQ:JD) is another major player in the Chinese e-commerce sphere. While the stock has not had the best performance historically in past years, its most recent earnings might indicate a reversal of that momentum.
In its most recent quarter, JD beat earnings estimates with a 7% revenue growth year-over-year, with increases in product, logistics, and service revenues. JD specializes in retailing at low prices but also reported a rise in the retail sector’s cross-margin, significantly impacting overall revenue.
JD is seeing great advancements in its advertising efforts, with optimized traffic allocation for first- and third-party advertisers. Other initiatives include enhancing user experience with a lower threshold for free shipping and sponsorships, which increased shopping frequency and user volume.
While this quarter was promising, JD has a long way to go before it returns to its top performance. Investors willing to stomach the risk and have faith in JDs ability to climb back to glory have an excellent opportunity in this stock.
On the date of publication, Joel Lim did not have (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.
