Stock (Symbol) |
Alibaba (BABA) |
Stock Price |
$79 |
Sector |
| Retail & Travel |
Data is as of |
| April 7, 2016 |
Expected to Report |
| Apr 28 – May 2 |
Company Description |
 BABA is a holding company. The Company is principally engaged in online and mobile commerce through products, services and technology. The Company provides retail and wholesale marketplaces available through both personal computer and mobile interfaces in the PRC and internationally. Retail marketplaces and services operated by the Company include the China online shopping destination (Taobao Marketplace); the China brands and retail platform (Tmall); the China group buying site that offers products by aggregating demand from consumers through limited time discounted sales (Juhuasuan), and the global consumer marketplace targeting consumers around the world (AliExpress). Wholesale marketplaces operated by the Company include the online China wholesale marketplace (1688.com) and the online business-to-business marketplace that focuses on global trade among businesses from around the world. Source: Thomson Financial |
Sharek’s Take |
 It’s time to put Alibaba (BABA) back on your radar, as both profit growth and BABA stock are doing well. Last qtr BABA produced 22% profit growth on a 32% increase in sales, and beat profit estimates of 88 cents by 11 cents. Analysts estimate qtrly profits increasing an average of 22% the next 4 qtr, and with the stock having a P/E of 23 BABA looks goof. Now the stock does have risks, mainly we don’t have clear financials on the company, management is spending on all sorts of outside ventures like newspapers, and Chinese stocks in general have been risky since last August. But the numbers look good. The one-year stock chart on BABA isn’t picture perfect, so I feel we need to wait and see what develops, but the numbers here look good and my Fair Value for 2017 is $105, more than 30% higher than the current price. |
One Year Chart |
 Now to be fair the 11 cent beat from last qtr has an asterisk beside it. Estimates had been lowered a total of 14 cents in the three qtrs prior. Also, the profit growth put out 2QtrsAgo was the same as last qtr’s growth (22%) and the company just met estimates 2QtrsAgo. Estimates are for 17%, 15%, 33% and 22% profit growth the next 4 qtrs — which would be great. Stock is reasonably priced with a P/E of 23. |
Fair Value |
 I feel the stock is worth 25x earnings, which is $85 a share, slightly higher than the current price. There’s solid upside to my 2017 Fair Value. |
Bottom Line |
 Alibaba’s not getting much news nowadays as it used to, and maybe that’s a good thing as for the first time in many months I like this stock. Growth is good and the P/E is reasonable. But the chart makes me hesitate as BABA is near resistance. I feel the stock market is overbought and could come down some –and bring BABA down some too. I’ll keep BABA on the radar for now. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio N/A |
