Stocks climbed higher late last week after President Trump criticized China in a widely anticipated speech.  In a logical world, Chinese stocks would have quickly declined yet the exact opposite occurred –  those stocks increased after Trump spoke.

The upward move is the result of Trump essentially repeating everything he previously said about China.  Anyone with critical thinking skills who tuned into the president’s China speech quickly understood his statement was nothing more than an opportunistic photo-op meant to shift the media spotlight back on himself.

Trump’s speech was quite the shrewd political move, serving as a distraction from the negative news cycle covering the coronavirus and racial strife in the United States.  Trump’s words were certainly bombastic, serving as tasty red meat for his base yet ultimately quite empty in terms of meaning.  The likes of BABA, PDD, JD and BIDU stand to benefit.

Alibaba (BABA)

E-commerce is now a primary economic driver both in China as well as the United States and the rest of the developed world.  BABA is an e-commerce star yet it also provides logistics support, cloud computing, food delivery and other services.  About half of the company’s online sales are in China.

To the surprise of many, it appears as though this high-flying stock still has room to soar.  The analysts’ average price target for BABA is $255.35, meaning it has 15% – 20% upside.

BABA’s POWR Ratings could not be better: As in every single component with a top ranking of 115 China stocks.  Look for BABA to return to its 52-week high of $231.14 before the end of the third quarter, if not sooner as China’s economy emerges from its trough.

(BABA is one of the stocks in the Reitmeister Total Return newsletter.  Click here to learn more.)

Baidu (BIDU)

Online searches have never been more important.  When people in China and elsewhere are in need of a product, service or information, they turn to search engines as opposed to the phone books of yesteryear.

BIDU provides Chinese and Japanese language searches.  The company also provides web-based marketing services.  In fact, BIDU has even expanded its business to the development of autonomous vehicles.

Though the BIDU POWR Ratings are not as impressive as those of the China stocks listed above, it is ranked in the top quarter of the category, highlighted by a B Peer Grade.

Most investors will be surprised to find BIDU might be a bit undervalued even though the growing importance of search engines is well-known.  BIDU has an average analyst price target of $142, meaning there is nearly 25% upside.

JD.com (JD)

Now that retail is shifting toward the internet, the likes of JD are raking in the cash.  JD is the second-largest e-tailer in all of China.  This direct sales business completes transactions both on its website and through mobile apps.

JD trades at the reasonable price of $59, has As across the POWR Ratings components and a #2 rank of 115 publicly traded businesses in the “China” segment.  The company has impressive top line growth of 34%.

It is not too late to get hitch a ride on the JD train.  The average analyst price target for this stock is nearly $60 while the high target is $67.

Pinduoduo (PDD)

When in doubt, invest in the safe haven of tech.  In particular, investors far and wide are flocking to e-commerce stocks.  China has more than 1.4 billion people so its e-commerce companies are awfully tempting from an investor’s perspective.

PDD’s e-commerce platform empowers users to engage in transactions in several ways including the uber-popular WeChat app.  The POWR Ratings have PDD ranked third of all 115 China stocks.  Dig into PDD’s POWR Ratings Components and you will find no weakness.

Furthermore, PDD price returns are immaculate:

• 44% across the past month
• 92% across the prior three months
• An incredible 265% across the past year

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BABA shares were trading at $217.60 per share on Monday afternoon, down $1.95 (-0.89%). Year-to-date, BABA has gained 2.59%, versus a 0.68% rise in the benchmark S&P 500 index during the same period.

About the Author: Patrick Ryan

Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...

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