Alibaba stock is oversold. I have been stalking Alibaba for months but was never able to push the buy button because it always felt like I was chasing. This is incredible that Alibaba stock is this oversold and I think we have President Trump to thank.
When the news broke that President Trump was limiting Chinese investment in US technology companies, China ADR stocks in the US sold off along with the general market. The idea is to prevent state-owned or politically connected Chinese companies from buying advanced U.S. technology. Beijing is seeking such technology as part of its “Made in China 2015” initiative, a roadmap to its goal of becoming the global tech leader.
This is not President Trump escalating a trade war as the lying mainstream media is reporting. China is a communist country which means its no where close to having as much open trade and open investment as the US. China restricts US investment in anything it deems a national security interest and includes vital agricultural products, energy sources and resources, basic facilities, transport services, culture, information technology products and service, key technologies, and major equipment manufacturing. President Trump is simply giving the Chinese a taste of their own medicine making investments across the pond on a more equal footing. This is something that the fake news media will seldom, if ever, mention.
President Trump said in a speech last night that everything will work out with the Chinese, that we love China and want to be friends but we’re not going to continue to be taken advantage of in trade. I believe President Trump is correct and over the coming months, we will get the news of much better trade and investment deals with China. I’m not worried about buying on weakness in amazing Chinese companies like Alibaba.
The amazing news came out on CNBC this week that Alibaba has passed IBM in cloud computing and is winning business from European and US clients. Wow! The Alibaba Cloud brought in over $2 billion in revenue in fiscal 2018! Source: Alibaba passes IBM in cloud computing and is winning business from European and US clients
In the latest sell off, notice that large players volume is not crashing lower. The other hint we have is that the Twiggs Money Flow is moving sideways and is not leading the sell off. That suggests traders are accumulating Alibaba stock on pullbacks.
Revenue has grown by 73.51% in the past year. Check out this awesome revenue chart!
That gives me goosebumps looking at that revenue growth. Measured over the last 5 years, revenue has been growing by an incredible 48.35% yearly.
I give Alibaba stock a buy rating and will add to the Services portfolio. Analysts agree with my buy rating. Overall there are no sell rating, no hold ratings, 28 buy ratings, and 1 strong buy rating on the stock. The average price target is $234.11 which represents 26.34% upside from the current price.
Disclosure: As Premium members know, I took a swing long position in Alibaba stock.