Stock (Symbol) |
Alibaba (BABA) |
Stock Price |
$181 |
Sector |
| Retail & Travel |
Data is as of |
| March 24, 20018 |
Expected to Report |
| May 16 |
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 |
 Alibaba (BABA) is growing much faster than investors are aware of. Last qtr the company delivered 56% sales growth, with more than 100% growth in the profitable Cloud Computing segment. Divisional year-over-year sales growth from last qtr was as follows:
The company’s two main e-commerce sites are Tmall, China’s biggest business to consumer site, and Taobao, a consumer-to-consumer site like eBay. BABA also owns Youku Tudou, China’s YouTube. There’s a new upstart taking a bite out of Alibaba’s Taobao. Pinduoduo is the fastest growing app in China. It has a lot of excellent features and could pose a threat to BABA’s dominance. But for now Alibaba is growing strong. Profits are expected to climb an average of 30% the next 4 qtrs, and with a P/E of 27 the stock is a very good value. The stock just recently completed a run from $100 to $200 and is now is digesting its gains. Management is spending on logistics (to dominate Asia’s retail market), cloud computing, digital entertainment and other innovation initiatives to stay ahead, and Alibaba is often in the news for . China is doing 15% of its commerce online, that means there’s lots of opportunity to capture an even bigger chunk of the remaining 85%. With excellent fundamentals and an undervalued stock, BABA looks fantastic going into 2017. |
One Year Chart |
 28% profit growth last qtr beat estimates of 26%. That’s not much. BABA whipped estimates the prior two qtrs. Also, qtrly estimates declined a bit. One thing this stock doesn’t have is a boost in estimates due to the Trump Tax plan. 2018 estimates increased from $6.75 to $6.77 this qtr (not much). Qtrly profit Estimates are 47%, 26%, 14% and 32%. The Est. LTG of 34% is outstanding. The P/E just declined from 36 last qtr to 27 this qtr — that’s great! |
Fair Value |
 Profit estimates didn’t rise much this qtr, and the company didn’t beat the street by much as well. I’m taking my Fair Value P/E from 40 to 35. Alibaba’s upside is tremendous. |
Bottom Line |
 Alibaba’s doesn’t have the momentum it had a couple qtrs ago, but growth is still strong — and on a P/E basis the stock is cheaper. I like the base this stock is building as I feel it could lead to another big leg higher. Overall, it’s tough to compete with these big juggernauts, as they have the cash to buy companies to get entrenched into another industry. BABA ranks 2nd in the Growth Portfolio and Aggressive Growth Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
1 of 39Aggressive Growth Portfolio 1 of 16Conservative Stock Portfolio N/A |
