5 Chinese Stocks to Buy

Wall Street analysts are all in on Tencent and Kingsoft, but I like Li Auto and Alibaba as well.
Anthony RussoJan 13,2021,19:48

While the tensions between Washington and Beijing are ongoing and Biden's stance on the matter yet to show, these Chinese U.S.-listed stocks may be preparing for long-term gains.

In December, when outgoing President Donald Trump signed a bill into law that could delist Chinese firms from trading on U.S. exchanges if they don’t comply with auditing standards, some of those stocks took a hit. At the same time, Beijing’s antitrust crackdown hit a number of big companies, sending their stocks lower. Some have rebounded and are poised to rise higher.

Here are five Chinese U.S.-listed stocks that investors should consider:

Alibaba Group (NYSE: BABA)

China’s largest online retailer has taken a hit over Beijing's scrutiny in recent months. So far, Alibaba was slapped with two fines at the maximum amount of 500,000 yuan from the State Administration for Market Regulation. It also reportedly faces a potential blacklisting from the U.S.

There was speculation about co-founder Jack Ma going missing, though some media reported that the Chinese billionaire has simply been laying low.

Alibaba’s stock has plunged 27% since late October. Its PE ratio just sits at 24.94 now, representing a perfect buy opportunity for investors.

Li Auto (Nasdaq: LI)

Another stock that has lost some ground in recent months is electric vehicle maker Li Auto. While the stock has been gradually recovering since the beginning of 2021, shares of Li Auto are down 21% since its peak of $43.96 in late November.

While generating a profit remains a problem for several EV makers including Li Auto, the company has shown no signs of slowing down in terms of sales. In December, Li’s deliveries surged by 530% to 6,126 vehicles.

Now might be a good time to buy Li Auto on the pullback, as demand for EVs continues to surge.

JD.com (Nasdaq: JD)

Some other Chinese U.S.-listed stocks have fully recovered and/or have posted gains that analysts tend to favor including one of the nation’s top e-commerce platforms JD.com.

After JD hit a rough patch in the middle of December, the stock is now up 12% since. However, the stock isn’t cheap, as JD currently trades more than 600 times its earnings.

Stifel and Jefferies' analysts seem to like JD despite its expensive price. "JD has a proven business model to capture long-term opportunities in the grocery segment," Jefferies analyst wrote in a note, as cited by NECN earlier this month.

Stifel's Scott Devitt currently has a $105 price target on JD, representing 18% upside from its current trading levels.

Tencent (OTC: TCEHY)

Analysts are also bullish on Tencent Holdings despite the regulatory pressure the gaming giant has seen from Beijing and a potential blacklisting in the U.S.

Jefferies noted the increased revenue per user on Tencent’s gaming platform along with its dominance in the online ad market, while Citi analysts like Tencent’s mini-programs on its lifestyle platform WeChat.

According to TipRanks, five out of six analysts rate Tencent as a buy with the average price target sitting at $89, implying 17% upside from its current levels.

Kingsoft Cloud (Nasdaq: KC)

Another Wall Street pick is cloud service provider Kingsoft.

The company, which provides its services to TikTok parent ByteDance, has watched its stock rise 2% so far this year.

But still, this stock may be a solid long-term play for investors. Between 2020 and 2023, Jefferies notes that Kingsoft could watch its cloud revenue jump by an estimated compound annual growth rate of more than 40%.

Also, Kingsoft has yet to show a profit. But by 2023, nine U.S. IT analysts expect the company to generate an annual profit of 930 million yuan.

According to TipRanks, the consensus among analysts on the stock is a "strong buy” with a $48 price target.

CapitalWatch Disclaimer

CapitalWatch has no business relationship with any company whose stock is mentioned in this article. Information provided is for educational purposes only and does not constitute financial, legal, or investment advice.

Topics:JD.com, Alibaba, Tencent, Kingsoft, Li Auto, Jack Ma, ByteDance, TikTok, Trump.
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