THE FUNDAMENTAL LONG PICTURE FOR ALIBABA (BABA)China’s economy is growing at a 6-7% annual rate and is on track to pass the United States as the largest economy in the world within the next decade or two. China’s middle class is made up of 1.3 billion individuals and those individuals are beginning to shop online a lot! In this scenario it only makes sense to own stock in the most dominant Chinese e-commerce company, Alibaba.
You have probably heard of Alibaba referred to as the Amazon (AMZN) of China. The similarities between Alibaba and Amazon don’t stop at online retail. Alibaba, like Amazon, also has a dominant and rapidly growing cloud computing business. In Q4, 2017 its cloud business grew by 104% YoY.
Aside from its already impressive e-commerce and cloud computing businesses, Alibaba also owns a portion of a rapidly growing fintech company called Ant Financial. We think Alibaba is well positioned for the next decade! The e-commerce, cloud computing, and the mobile payment industries should continue to see plenty of growth!
Alibaba’s stock is currently trading at forward-PE of 26. Analysts have forecasted a 5-year EPS growth rate of 29%, assigning Alibaba a PEG of 0.9.
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