by winston » Tue Jul 10, 2018 12:37 pm
not vested
Potential Multibagger Stocks For 2018 And Beyond: JD.com (JD)
The ongoing tariff drama between the United States and China continues to take a heavy toll on Chinese stocks. On Friday, a series of tariffs went into effect, showing that all the noise is starting to turn into a more tangible risk.
Not surprisingly, Chinese stocks, as measured by the Xtrackers Harvest CSI 300 China A ETF (NYSEARCA:ASHR) are having a rough 2018. The ASHR ETF is down 19% year to date and almost 30% from its January peak.
With that selloff comes opportunity. Leading Chinese online retailer JD.com (NASDAQ:JD) has sold off again. While many investors think of Alibaba (NYSE:BABA) as the Amazon (NASDAQ:AMZN) of China, it’s much closer to eBay (NASDAQ:EBAY).
eBay isn’t a terrible company by any means. But, Amazon won because it controlled the whole purchasing experience, whereas eBay, as a marketplace for third-party vendors, has had much less success in becoming truly dominant.
JD.com, as the leader in authentic high-quality goods, has the edge against Alibaba in selling to the emerging wealthier Chinese consumer. JD’s dramatic lead in logistics also positions it to win against Alibaba in convenience and reliability.
Ultimately, China is large enough for two large online retailers. And both companies are growing aggressively outside of their home market. However, given Alibaba’s way larger market cap than JD, JD stock is the obvious compelling growth play here.
Selling at less than 1x price/sales, that ratio could easily triple without looking too expensive. And, with JD growing sales more than 30%/year, there is plenty of upside coming on that front as well.
Source: Investor Place
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