Stock (Symbol) |
Alibaba (BABA) |
Stock Price |
$137 |
Sector |
| Retail & Travel |
Data is as of |
| June 13, 2017 |
Expected to Report |
| Aug 9 |
Company Description |
 BABA is a holding company. The Company is principally engaged in online and mobile commerce through products, services and technology. 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). Source: Thomson Financial |
Sharek’s Take |
 This qtr Alibaba (BABA) had the best news of any stock I follow. The news that revenue would grow 45-49% was well above analyst estimates of 31% growth, and the stock should go materially higher on this news. Not only does that mean profits will probably come in higher than expected, but the multiple (P/E ratio) should rise as well. Last qtr the company got off to a great start to the year, with its 4 divisions reporting the following year-over-year sales growth:
BABA’s two main e-commerce sites are Tmall, China’s biggest business to consumer site, and Taobao, a consumer-to-consumer site like eBay. It also owns Youku Tudou, China’s YouTube. Management also has a $6 billion stock buyback plan in place. Analysts raised this year’s profit estimates from $4.30 last qtr to $4.56 this qtr (which I feel is low). My Fair Value on this stock goes up from 30x earnings to 35x. These adjustments take my 2017 Fair Value from $129 to $160. Next year’s Fair Value is $209. This company is obviously clicking on all cylinders, and is one of the best growth stocks available to investors. |
One Year Chart |
 Sales grew an amazing 60% last qrt, as profits soared 39%. BABA did miss profit estimates though, due to a tax change. Analysts bumped up 2018 profit estimates from $5.48 to $5.96 — that’s a big jump! Qtrly profit estimates also rose and now stand at 26%, 26%, 24% and 59%. With a Est. LTG of 28% and a P/E of 30 this stock is undervalued. |
Fair Value |
 My Fair Value on of 35x earnings might be too low. I can see the stock getting to 40x earnings in a heated-up stock market (like one we are having now). The upside to 2018 is excellent. |
Bottom Line |
 Alibaba’s wasn’t a great stock after it went public, but has now broken out of its range and has clear skies ahead. This revenue news is big and could lead to profits coming in above expectations, and that could be fuel for the stock. With solid fundamentals and a reasonable P/E ratio, BABA ranks 2nd in the Growth Portfolio and Aggressive Growth Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
2 of 30Aggressive Growth Portfolio 2 of 15Conservative Stock Portfolio N/A |
