BABA: Top 3 China Stocks as Economy Reopens

China was the first economy knocked down by the Coronavirus and now appears to be the first ready to reopen. As such many investors are turning their attention to the best looking China stocks at this time. For me that is a pretty short list headed by the 3 with the most short term and long term appeal: Alibaba (BABA), JD.com, Inc. (JD) and NetEase (NTES).

Alibaba Group (BABA - Get Rating)

In my book every stock list starts with BABA because for every reason we have clung to the FAANG stocks in the states, this one has as much if not more appeal going forward. That is why Alibaba (BABA) is one of only 6 stocks currently held in my Reitmeister Total Return portfolio (learn more here).

In addition to its famed e-commerce platforms, BABA also offers a host of other services including great growth in online payments, cloud services and more. Clearly they dominate in China. But going forward BABA has big ambitions to take their services to many other countries around the globe. That is why the growth rate is still expected to come in over 25% per year helping to fuel the share price as well.

Prior to this bear market BABA made it all the way to $231 before getting knocked back under $170 at the darkest hour in late March. Since then shares have made back a smidge above $200. Yet there is good reason why the average price target sits at $258 including a recent $290 from 5 Star analyst Aaron Kessler at Raymond James. That gives ample cause to pick up BABA shares at the current attractive discount.

JD.com, Inc. (JD)

Similar to BABA, JD provides direct-to-consumer goods. The difference is that JD sticks with sales offerings, and has not yet branched out to the other areas that BABA has, such as online payments and similar services.

JD is a strong player in the electronics market as well as selling a ton of books, audio and visual equipment, and most other consumer goods. If you want your portfolio to benefit from the soon-to reopen Chinese market, JD is a great pick.

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Investors did not waste much time scooping up shares after the modest dip in March. Now JD is actually up 28% year to date which is why the momentum based POWR Ratings system shows shares as A rated Strong Buy. On the value front Fawne Jiang of Benchmark is pounding the table that $60 is the rightful destination for shares later this year making JD very attractive at the current price of only $45.

NetEase, Inc. (NTES - Get Rating)

NTES is another strong performer that is expected to accelerate growth once the Chinese economy is fully opened. Note that NTES has fared pretty well to date as the majority of their services were in high demand throughout the lockdown. Especially their popular gaming platforms. (When you are stuck at home, online gaming seems like a pretty good entertainment option).

Shares did not stay cheap for long in March as investors were happy to bid them back up in a hurry. In fact, NTES is now up 17% on the year on top of the 211% gains served up the past five years.

Analysts are still expecting even more gains to come for NTES with a slew of price targets from $405 to $439 from the top rated analyst at Nomura. It is truly “game on” for NTES shares at this time and wouldn’t wait too much longer before adding to your portfolio.

(BABA - Get Rating).

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BABA shares were trading at $203.64 per share on Monday afternoon, down $0.72 (-0.35%). Year-to-date, BABA has declined -3.99%, versus a -10.41% rise in the benchmark S&P 500 index during the same period.

About the Author: Steve Reitmeister

Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks. More...