Top 3 China Stocks That Are Long-Term Winners

NYSE: BABA | Alibaba Group Holding Ltd. ADR News, Ratings, and Charts

BABA – If you are a fan of undervalued growth stocks, you can consider investing in Chinese tech giants, such as Alibaba (BABA), Baozun (BZUN), and JD.com (JD).

The last year and a half have been a rough period for Chinese stocks listed on the NYSE. The ongoing trade war between the U.S. and China coupled with privacy issues surrounding these firms contributed to a lot of volatility. Companies were also worried they might be delisted in the U.S. stock exchanges and filed for secondary listings in Hong Kong.

However, while there are some challenges impacting Chinese stocks several companies are growing revenue and earnings at an enviable pace. China is still one of the fastest-growing economies in the world and the increase in purchasing power of the country’s rapidly growing middle-class indicates its growth story remains intact.

Here we look at three such stocks that should increase investor wealth substantially in the upcoming decade.

Alibaba is a top Chinese tech stock

One of the top tech stocks for your portfolio is Alibaba (BABA), an internet heavyweight with a market cap of $717 billion. Alibaba is one of the largest e-commerce companies in China. It is also a digital-payments giant and gaining traction in the public cloud space.

Despite the company’s massive size, investors can brace themselves for a multi-year double-digit revenue growth trajectory due to the several secular tailwinds for Alibaba. The COVID-19 pandemic has accelerated the shift towards online shopping which in turn has driven demand for digital payment technologies as well.

This has helped Alibaba to increase sales by 34% in the June quarter and by 30% in the September quarter, on a year-over-year basis. Its annual active customers touched 757 million while mobile monthly active users rose to 881 million in Q3.

Further, Alibaba stock is trading at an attractive valuation and is cheaper compared to peers such as Amazon and Shopify.

Baozun earnings will double by 2021

Baozun (BZUN) is a company similar to Shopify (SHOP) and provides website creation tools, marketing, and several other ancillary services such as customer management and warehousing that helps businesses establish an online presence. Several product companies are eying the highly lucrative Chinese market to boost online sales and are leveraging the Baozun platform for the same.

Baozun stock has a market cap of just over $3 billion indicating a forward price to sales multiple of 2.45x and a price to earnings ratio of 32.5x. We can see the stock is undervalued given its estimated earnings growth of 50.6% in 2020 and 38% in 2021. Analysts also expect Baozun to increase sales by 30% in 2020 and 28.7% in 2021.

China is the largest e-commerce market and accounted for over 50% of global online sales in 2019. According to e-Marketer, the country’s e-commerce spending will rise from $1.93 trillion in 2019 to $4.1 trillion in 2023, giving it enough room to drive top-line growth.

JD.com is up 142% in 2020

The third and final stock on the list is JD.com (JD). This is another stock that has managed to crush broader markets in 2020 and is up a stellar 142% year-to-date. In the first six months of 2020, JD increased sales by 28% and operating income rose over 100% year-over-year to $1 billion, indicating high operating leverage.

JD.com has an integrated business model that includes an e-commerce platform as well as a robust logistics network. At the end of the June quarter, its annual active customers stood at 417 million, up 30% compared to the prior-year period.

Similar to other companies here, JD stock is also trading at a reasonable valuation despite its impressive returns this year. It has a market cap of $140 billion indicating a price to sales multiple of just 1.3x and a price to earnings multiple of 59x. Comparatively, its earnings are forecast to rise by 52% in 2020 and 46% in 2021.

Want More Great Investing Ideas?

“MUST OWN” Growth Stocks for 2021

Is the Bull Market Back on Track?

5 WINNING Stocks Chart Patterns


BABA shares were trading at $260.21 per share on Monday morning, down $0.63 (-0.24%). Year-to-date, BABA has gained 22.68%, versus a 13.88% rise in the benchmark S&P 500 index during the same period.


About the Author: Aditya Raghunath


Aditya Raghunath is a financial journalist who writes about business, public equities, and personal finance. His work has been published on several digital platforms in the U.S. and Canada, including The Motley Fool, Finscreener, and Market Realist. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
BABAGet RatingGet RatingGet Rating
BZUNGet RatingGet RatingGet Rating
JDGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


Updated 2024 Stock Market Outlook

The bull market continues to rage on with the S&P 500 (SPY) making new highs. That is the past...the question is what does the future hold? That is why 44 year investment veteran Steve Reitmeister provides this updated 2024 Stock Market Outlook to help you carve a path to outperformance the rest of the year. Read on below for the full story...

3 Energy Stocks Set to Soar Beyond Expectations

Given the geopolitical tensions, increasing global oil demand, and supply adjustments, the energy sector is poised for robust growth. Therefore, investors might consider investing in energy stocks TechnipFMC (FTI), Weatherford International (WFRD), and ChampionX (CHX), which are poised to exceed expectations. Keep reading…

Has Carnival (CCL) Stock Turned Into a Buy After Earnings Release?

Carnival Corporation (CCL) reported record revenue in its most recent quarter but still faces a negative bottom line. The collapse of Francis Scott Key Bridge brings more uncertainty to its financials. Given these events, what stance should one take with CCL stock? Read more to find out…

3 China Stocks Positioned for Long-Term Growth

Despite facing challenges, the Chinese economy has demonstrated resilience, as evidenced by recent robust industrial output and retail sales data. Given this outlook, it might be an opportune time to own three top-notch China stocks, JD.com, Inc. (JD), China Automotive Systems (CAAS), and Youdao, Inc. (DAO). Read on…

Investor Alert: “Buy the Rumor, Sell the News!”

Everyone knows that the Fed is going to cut rates at some point this year. That is the worst kept secret on the planet helping to explain how we keep making new highs for the for the S&P 500 (SPY). Unfortunately that creates an interesting predicament for stocks after rates are cut. Plus another hurdle in the 2024 Presidential election. Steve Reitmeister is here to share his insights on the market outlook along with a preview of his top 12 stocks to outperform. Read on for more...

Read More Stories

More Alibaba Group Holding Ltd. ADR (BABA) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All BABA News