JD.com Stock: Where to Go after August Rally

A series of regulatory crackdowns by the Chinese authorities have dealt a major blow to China’s major tech companies. Some of the most-affected Chinese stocks included JD.com (JD), Alibaba (BABA), Read More... The post JD.com Stock: Where to Go after August Rally appeared first on TipRanks Financial Blog.

JD.com Stock: Where to Go after August Rally

A series of regulatory crackdowns by the Chinese authorities have dealt a major blow to China’s major tech companies. Some of the most-affected Chinese stocks included JD.com (), Alibaba (), Tencent Holdings ().

While JD hasn't been hit directly (yet) from regulators, it appears investors are keen on reducing exposure to China.

For JD stock, this has culminated in a decline of more than 28% from its peak this year. (See JD stock charts on TipRanks)

Yet, this is actually one of the only stocks many fund managers will touch right now. Famed growth stock investor Cathie Wood has been most bullish on JD stock, relative to its Chinese tech peers.

With the Hang Seng index rallying in recent weeks, the question is -- can this continue? Will JD stock surge back to all-time highs?

Let's take a look at what may drive this Chinese tech stock's performance from here. I am bullish on the stock.

JD Stock's Strong Recent Performance

China’s second-largest conglomerate announced its second-quarter results on August 23. As per the Q2 financial data, net revenues came in at $39.3 billion. This represents a 26% jump from the revenue generated in Q2 2020. 

JD clocked net service revenue of $5.3 billion, a 49.2% year-over-year increase. Income from operations stood at $46.6 billion, while non-GAAP income from operations was $0.4 billion. 

These numbers broadly show strength in the Chinese recovery from the pandemic. Investors betting on a resurgence in Chinese consumption have gotten what they wanted.

Attractive Valuation

JD stock isn't cheap, in a traditional sense. This is a still a company trading at roughly 54x forward earnings. However, on a price-to-sales basis, this stock is trading at 0.7x, a criminally low valuation for this high-growth play.

Those who believe JD can outpace analyst predictions, on the bottom line in particular, should certainly consider JD stock at these levels. This is a growth stock trading at a valuation that is nearly impossible to find in the U.S.

It's a Chinese tech company, and that carries its own set of risks. This is also a logistics-heavy company that will need to reinvest in its business to see growth over the long-term.

However, it appears these factors are more than baked into JD's current valuation right now. The company's forward-looking growth projections remain strong.

Rally Disrupted by Newly Proposed Regulations

China decided to introduce fresh regulations towards the end of last month. According to Dow Jones, this new regulatory curb will prohibit big Chinese companies with massive amounts of consumer data from floating shares in the U.S.

This new rule halted the rally that was noticed in Chinese tech stocks. Tencent Holdings stock dropped 1.1% while Alibaba and Meituan slid 3.9% and 0.8%, respectively. JD stock also dropped following the announcement alongside its peers.

The Cyberspace Administration of China stated companies with more than 1 million users would now have to seek approval before listing in foreign nations.

This sort of regulatory oversight could hamper JD's ability to raise foreign capital. However, given JD's well-capitalized structure, it's hard to argue that such capital raises may be needed from here.

Wall Street’s Take

According to TipRanks' analysts rating consensus, JD stock is a Strong Buy. Out of 12 ratings, there are 11 Buy recommendations, and one Sell recommendation. 

The average JD price target is $95.23. The stock price target lies between a low of $62 per share, and a high of $125 per share.

Bottom Line

Despite the regulatory crackdowns, JD stock seems to be doing quite well. The company is focusing on expanding its line of business and moving into telehealth and supermarkets. JD’s logistics prowess, vast business network, and focus on innovation give it an edge against its competitors.

Like other Chinese tech giants, JD comes with massive growth potential. However, unlike many of its peers, JD has not yet faced any direct crackdown from authorities so far.

Accordingly, this is a stock that investors may rightly view as safe to consider right now. 

Disclosure: At the time of publication, Chris MacDonald did not have a position in any of the securities mentioned in this article

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates, and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices or performance.

The post JD.com Stock: Where to Go after August Rally appeared first on TipRanks Financial Blog.

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"Check Out What Amazon's Up To Now!" Says BofA

Wasn't Amazon.com (AMZN) supposed to be an online retailer? Because we distinctly recall hearing at some point that Amazon.com sold stuff online... and yet it's what Amazon's doing offline that Read More... The post "Check Out What Amazon's Up To Now!" Says BofA appeared first on TipRanks Financial Blog.

"Check Out What Amazon's Up To Now!" Says BofA

Wasn't Amazon.com () supposed to be an online retailer? Because we distinctly recall hearing at some point that Amazon.com sold stuff online... and yet it's what Amazon's doing offline that earned it a re-recommendation from Bank of America analyst Justin Post.

In a note reiterating his "buy" recommendation and $4,250 price target on Amazon, Post explains that "Amazon is building an 'omni-channel POS solution' that includes its own point-of-sale (POS) hardware and software." And yet, by definition, point-of-sale hardware is equipment used to check out a customer at a physical retail location.

In case you have not yet heard, Amazon -- the world's biggest e-tailer -- also has developed quite a number of physical retail locations at which it might install this new "omni-channel POS solution." Amazon's physical businesses include: Amazon Books stores, Amazon 4-Star department stores, Amazon Pop Up stores, and Amazon Fresh, Amazon Go, and Amazon Go Grocery grocery stores too. (Oh, and Whole Foods, of course).

In addition to all of those potential outlets at Amazon proper, Post says Amazon is now looking to sell its new "omni-channel POS solution" to third party retailers as well.

As Post observes, Amazon seems to have developed its new solution as "a response to [the Covid] pandemic and Shopify" as well.

Shopify -- also originally an online phenomenon -- has been promoting its own point of sale system lately with a free trial for business customers. Amazon may see Shopify's offering as a threat to its own sales, because, as Post explains, "the pandemic has created a greater sense of urgency by local businesses (SMBs) to add multi-channel sales capabilities, and growing number of merchants have been adopting third party services, including Shopify and Google search, to help sell directly to consumers."  

Post notes that there may initially be "resistance" to Amazon's offering from local businesses that will have "competitive concerns" about letting the fox into the hen house. In the analyst's view, however, "the opportunity is big" enough for Amazon to risk taking a flyer on this and see if it sticks.

Consider that an Amazon-branded POS system could offer customers the ability to "add Amazon check-out options," and "even allow customers to pay with their Amazon accounts at retail locations." If Amazon is able to capture sales data from transactions run through its POS system (as seems likely, and maybe even the whole point), it could yield valuable data for Amazon on other companies' stores' "inventory and business analytics." Amazon would presumably want to re-package this data to provide "customer data management for SMBs" as a service. But Amazon will probably also integrate sales data run through its devices into its own internal data troves as well, the better to understand which products are selling, where, and to whom -- so as to better optimize its own product offerings online.

Because in case you have forgotten by now, Amazon was originally and remains in large part today... an online retailer.

Overall, Wall Street likes Amazon, a fact clear from the 32 unanimous Buy ratings on record. The forecast is for one-year gains of ~22%, given the average price target currently stands at $4,225.13. (See AMZN stock analysis on TipRanks)

To find good ideas for tech stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

The post "Check Out What Amazon's Up To Now!" Says BofA appeared first on TipRanks Financial Blog.

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