Buy These China Internet Stocks on Chinese New Year

Friday, Feb. 16 marks the first day of the annual Chinese New Year celebrations, initiating the year of the dog and kicking off a 15-day holiday that will be honored by billions of people around the world.

Chinese New Year is one of the most prominent festivals in the world, and it typically witnesses the largest annual mass migrations of people on earth. The first day’s celebrations are typically focused on the welcoming of deities and the honoring of elderly people and include fireworks, bamboo stick burning, and even abstaining from meat consumption.

The festival also marks a week-long holiday for Chinese workers and tends to be a busy stretch for tourism. This year, some 6.5 million mainland Chinese people are reportedly planning to travel abroad, potentially padding the top line of travel service providers like Ctrip.com CTRP.

Here at Zacks, we wanted to get in on the fun by taking a look at a few of our favorite Chinese internet ADRs. Check out these three tech stocks as the year of the dog kicks off!

1.       JD.com (JD)

JD.com is one of China’s largest e-commerce companies—and perhaps its most popular direct-to-consumer online shopping platform. The stock is currently sporting a Zacks Rank #2 (Buy), as well as an “A” grade for Growth in our Style Scores system.

JD is a top pick for those looking for explosive EPS growth. The company will report its Q4 results in two weeks, and full-year earnings are projected to improve by over 400%. That expansion is expected to continue with EPS growth of an additional 65% next year. JD’s valuation is a bit stretched right now, but this stock is widely considered a buy-and-hold play for the continued growth of China’s digital consumer.

 

2.       YY Inc. (YY)

YY is an online communication social platform that focuses on live-streaming content. The company hosts a variety of video shows, including video game broadcasts, and it also operates mobile game platforms and online dating sites. YY is currently holding a Zacks Rank #2 (Buy) and has an “A” grade for Growth.

This stock is one of the smaller players in this space, but investors should not overlook it. The firm is expected to improve its earnings by an annualized rate of 21.2% over the next three to five years, and it has some attractive valuation metrics. In fact, the stock sports a P/E of just 16.67 and a PEG of 0.79, so investors are clearly getting a great price for that profit outlook right now.

 

3.       Alibaba Group Holding Limited (BABA)

Alibaba is not only the leader in Chinese wholesale e-commerce, but also a cutting-edge technology company looking to shake up its country’s retail sector and dominate several emerging tech businesses. BABA has also emerged as means for U.S. traders to bet on the Chinese economy, so it serves as an important bellwether in America these days.

Alibaba is currently sporting a Zacks Rank #3 (Hold), as well as an “A” grade for Growth in our Style Scores system. A dominant and familiar name to many, BABA remains an aggressive growth stock. Its earnings are expected to improve by a staggering 30.5% over the next three to five years, on an annualized basis.

 

Want more analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!

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JD.com, Inc. (JD) : Free Stock Analysis Report
 
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