Why JD com Stock Is A Smart Buy In China’s Deflation Cycle

Other indicators also show weakness, including factory production, and most economists believe China is entering a period of secular slowing growth. The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988.

Farzin Azarm of Mizuho Americas says money has been sticking with U.S. tech and artificial intelligence related stocks given their continuous climb; but when these trades unwind, cheaper valuation com… Chinese stocks have bounced higher amid a flurry of signals of government support. Our experts picked 7 Zacks Rank #1 Strong Buy stocks with the best chance to skyrocket within the next days. Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions. Based on our research, we believe these estimate revisions are directly related to near-team stock moves.

Competition for JD is heating up as well, from the likes of Temu owner PDD Holdings (PDD). Unlike Alibaba (BABA) and JD, PDD actually had a good year in terms of its stock price (see chart below), racing ahead of Alibaba to become the biggest Chinese online marketplace by market cap. Therefore, JD looks reasonably valued — but not cheap — relative to its peers. With a mission to provide customers with a convenient and reliable shopping experience, JD.com has built a robust logistics network to facilitate fast and efficient deliveries. The company has also heavily invested in advanced technologies like AI, big data, and cloud computing to enhance its operations and provide innovative solutions to its customers. Steve Symington has no position in any of the stocks mentioned.

Expanding its product categories and reaching untapped customer segments are potential avenues for growth. JD.com’s investment in advanced technologies, including AI and big data, also opens doors for further innovation in customer experience and supply chain management. With a sizable chunk of JD.com’s shares potentially hitting the market in the coming months, its stock price could come under pressure.

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This dedication to giving investors a trading advantage led to the creation of our proven Zacks Rank stock-rating system. Since 1988 it has more than doubled the S&P 500 with an average gain of +24.18% per year. These returns cover a period from January 1, 1988 through January 1, 2024.

Analysts’ average consensus target price of $102 implies a potential upside of 64 percent. However, most of the current target prices were issued by analysts before the current crackdown started. Many Chinese stocks sold off as China cracked down on its listed companies. While the latest crackdown targeted companies in theeducation aafx trading broker sector, most of the other listed Chinese equities felt the pressure as the investment sentiment deteriorated. ARK Invest’s Cathie Wood also sold some of her positions in these names, including JD.com. After the recent sell-off, investors wonder if JD.com will go back up and what its forecast looks like for 2025.

Only Zacks Rank stocks included in Zacks hypothetical portfolios at the beginning of each month are included in the return calculations. Zacks Ranks stocks can, and often do, change throughout the month. Certain Zacks Rank stocks for which no month-end price was available, pricing information was not collected, or for certain other reasons have been excluded from these return calculations. Zacks may license the Zacks quebex Mutual Fund rating provided herein to third parties, including but not limited to the issuer. In 2022, JD.com reported a remarkable year-over-year increase in revenue, reaching over one trillion CNY (around USD 140 billion), showcasing its strong market presence and continuous growth. The company’s net income also surged significantly, highlighting its profitability and efficient cost management strategies.

According to its website, buyers can pick up their orders at nearby pickup points as early as the next day, with no order value threshold. Those headline numbers looked solid, but JD’s stock plunged 11% after the report and remains 60% below its all-time high from February 2021. Let’s see why the bulls retreated — and if JD is a potential turnaround play for 2023. © 2024 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions.

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However, regulatory uncertainty is far too much and difficult to price in. The regulatory risks might have overshadowed the growth outlook. On paper, the e-commerce company reported adjusted income of 61 cents per share. Covering analysts heading into the Q2 disclosure anticipated earnings per share (EPS) of 41 cents. That exceeded Wall Street’s consensus target of $38.5 billion. At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors.

1. Based on those expectations, JD trades at 22 times forward earnings.
2. Under his guidance, the company has experienced tremendous growth and has become a prominent player in the e-commerce industry.
3. These initiatives not only stimulate consumer spending, but also align with broader sustainability goals.
4. Let’s see why the bulls retreated — and if JD is a potential turnaround play for 2023.
5. That change wasn’t too surprising, since Alibaba and Pinduoduo also stopped disclosing their exact user numbers several quarters ago.

JD’s changes started at the beginning of 2023 in response to its sagging performance, as the company saw revenue growth slow down to 9.9%, far below the 10-year average of 39.3%. It has spelled out changes including underlining lower prices as a focus for the next three years. That change wasn’t too surprising, since Alibaba and Pinduoduo also stopped disclosing their exact user numbers several quarters ago. On the bright side, JD Retail’s adjusted operating margin still rose 60 basis points to 3.7% for the full year as it reined in its spending and streamlined its business. JD.com operates in the highly competitive e-commerce industry, which has experienced rapid growth in recent years. The company’s key advantage lies in its expansive product range, efficient logistics infrastructure, and commitment to customer satisfaction.

With $19 billion in net cash, JD’s enterprise value stands only at 3.6x EV/FCF. Building a large-scale logistics infrastructure can incur significant capital expenditure, and maintaining it can incur significant operating expenses. JD spent over 10 years building this infrastructure, and the cost of rebuilding it today could be even more expensive.

Intense competition from other e-commerce giants, regulatory changes, and economic uncertainties could impact the company’s performance. Supply chain disruptions, cybersecurity threats, and changing consumer preferences pose potential risks. JD.com must manage these risks effectively through proactive strategies and adaptability to market dynamics. JD.com’s target market primarily includes consumers worldwide who prefer online shopping for a wide range of products, from electronics to fashion, groceries, and healthcare items.

Zacks Rank stock-rating system returns are computed monthly based on the beginning of the month and end of the month Zacks Rank stock prices plus any dividends received during that particular month. A simple, equally-weighted average return of all Zacks Rank stocks is calculated to determine the monthly return. The monthly returns are then compounded to arrive at the annual return.

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Unlike PDD, which has an international footprint, JD is China focused, which puts it in a relatively vulnerable place if consumer spending slows down this year along with a broader economic cooling off. They also see an EPS increase of 9.7%, which might be a softening from the forecast 17.7% increase in 2023, but JD’s forward price-to-earnings (P/E) ratio at 6.6x does look attractive compared to peers. BABA has a forward P/E of a slightly higher 7.1x for its financial year ending March 2025 and PDD is way higher for 2024 than both at 19.7x.

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China’s large e-commerce market is growing and JD.com is very well placed in this space. In the long term, the company has all of the makings to become a dominant player in Chinese grocery e-commerce, which accounts for a large part of the overall consumption in China, according to Arisaig Partners. JD.com has an advantage in bitstamp review this space since it has self-managed and fully integrated logistics capabilities. Tencent will pay a special dividend of more than 457 million JD.com shares to its investors. Tencent’s shareholders will receive 1 share of JD.com for every 21 shares of Tencent that they own on Jan. 25, the record date for the transaction.

Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, top-rated podcasts, and non-profit The Motley Fool Foundation. The company has a strong growth outlook with analysts forecasting revenue growth of 27.7 percent and 22.4 percent for 2021 and 2022,respectively. The long-term outlook for JD stock also looks positive since the retail and e-commerce market is growing rapidly. However, as Cathie Wood suggested, the current value framework for Chinese names has shifted with the crackdown. From a growth perspective, many Chinese names look like a bargain, including JD.com.

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There are currently 7 hold ratings and 8 buy ratings for the stock. The consensus among Wall Street analysts is that investors should “moderate buy” JD shares. JD.com has several growth opportunities to leverage in the dynamic e-commerce landscape. The continued growth of online shopping in China and globally presents a vast market for JD.com to capture.