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Headwinds Appear Temporary By TipRanks


© Reuters. Alibaba Stock: Headwinds Appear Temporary

I am bullish on Alibaba (NYSE:). Over the last six months, the stock fell 32.3%. This presents a great opportunity for investors who are looking to buy-the dip.

Alibaba is an important B2B and B2C online e-commerce firm. The global e-commerce industry’s market size this year is $4.9 trillion, and is expected to reach $7.4 trillion in 2025.

Alibaba currently trades at a 51% discount on its 52-week peak of $319.32. It suggests this might be an opportunity to get long. (See Alibaba’s stock charts on TipRanks).

BABA Is Undervalued

Alibaba deserves a spot in your long-term growth-at-reasonable-price, or GARP, portfolio. This stock’s forward P/E ratio is only 13.7x.

It’s less than Amazon (NASDAQ 🙂 51.2x or Etsy NASDAQ 🙂 59.9x and Shopify NYSE : 226.5x.

GARP investors can exploit this bias against Alibaba.

China Headwind is Temporary

Investors are overreacting to Alibaba’s regulatory problems as co-founder Jack Ma will eventually be forgiven by President Xi Jinping.

BABA’s Stochastic Oscillator score is 49.7. This technical indicator suggests that investors remain undecided.

Alibaba is Very Profitable

Based on the chart below, BABA deserves more love from investors. EBITDA margin for Alibaba is 20%; gross margin at 40% and net income margin at 19.25%.  Alibaba’s profitability statistics are better than Amazon.

(Source: Motek Moyen)

The growing profitability of Alibaba is why it has a Piotroski F Score of 7. According to this, Alibaba is considered a high-value stock.

Wall Street’s Take

Wall Street analysts consider Alibaba a Strong Buy, based on 22 Buys, one Hold, and one Sell. BABA has a target price of $269.18. This implies a potential upside of 73.5%.


Hyper-growth attributes, and growing profitability make Alibaba a very attractive investment.

This company’s undervaluation relative to its peers is an opportunity warrants attention.

Disclosure: Motek Moyen had no position at the time this article was published.

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