2 Chinese Tech Stocks To Consider As US Rally Loses Steam


Tech stocks around the world have been rallying from the depths of pandemic trade with a ferocity that hasn’t been seen since the 90s. US tech firms look to be running out of steam, and it may be time to look overseas for opportunities. China equities may still have sizable upside potential for some of the best-positioned enterprises.

This pandemic has increased the world’s reliance on technology, accentuating the already rapidly digitalizing Chinese economy. Below are 2 stocks that have been given a sizable pandemic tailwind with rallies that still have legs.

My Chinese Picks:

Alibaba (BABA)

The fact that the Amazon (AMZN) of the East (aka BABA) has not taken off like its western counterpart is baffling. Alibaba controls the e-commerce space (80% market share), as well as its cloud-computing category (roughly 50% market share) in the most populous and soon-to-be largest economy on earth.

Alibaba is valued at less than half of Amazon despite producing substantially wider margins, greater profitability, and having a larger topline growth outlook for the next couple of years.

BABA is a buy today, and 14 out of 14 analysts agree, giving it price targets between $230 and $300 per share (roughly $260 average), a 5 to 37% upside from where it is trading today ($220 per share). As a long-term investor, I would not hesitate to start a position in this revolutionary tech enterprise before it takes off.

NetEase (NTES)

NetEase is a leading internet company in China that runs some of the most popular mobile and PC games in the region. The company also operates a rapidly expanding online education platform that ranges from Pre-K to university-level classes and has many other innovative ventures ranging from cloud music to a private label e-commerce brand.

The enterprise saw robust growth in Q1 with stronger than expected gaming sales, and its cloud music segment more than doubled year-over-year. With more than 800 million users, NetEase threatens Tencent Music’s (TME) leadership position in the region. Analysts are optimistic about the company’s potential in this category.

NTES has returned investors north of 25% returns thus far in 2020, but this stock still has more room to run. Analysts continue to increase their EPS estimates and have pushed this stock into a Zacks Rank #2 (Buy).

NetEase, Inc. Price, Consensus and EPS Surprise

NetEase, Inc. Price, Consensus and EPS Surprise

NetEase, Inc. price-consensus-eps-surprise-chart | NetEase, Inc. Quote

Take Away

China is moving online at a prolific rate, and the global pandemic has only expediated this digitalizing trend. The stocks I discussed above are well-positioned to profit from the digital revolution that is about ready to explode in Asia. If you are a believer in the global market rally, I would not hesitate to put a long position on either of these equities.

Zacks Top 10 Stocks for 2020

In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?

Last year’s 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.

Access Zacks Top 10 Stocks for 2020 today >>

Click to get this free report

Tencent Music Entertainment Group Sponsored ADR (TME): Free Stock Analysis Report

NetEase, Inc. (NTES): Free Stock Analysis Report

Alibaba Group Holding Limited (BABA): Free Stock Analysis Report

Amazon.com, Inc. (AMZN): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *