For Immediate Release
Chicago, IL – April 21, 2023 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: NetEase NTES, Vipshop VIPS, Momo MOMO, KE Holdings Inc. BEKE, and Trip.com Group Limited TCOM.
Here are highlights from Thursday’s Analyst Blog:
5 Promising China Stocks to Buy on Solid Q1 GDP Growth
China's zero-Covid policy unquestionably dented consumers' propensity to spend, while its property crisis destabilized growth in the world's second-largest economy last year. However, China's bold decision to abruptly abandon the policy helped its economy spring back to life in the first quarter of this year.
During the January to March period, China's gross domestic product (GDP) grew by 4.5% year over year (YoY), better than the estimate of a growth of 3.8% YoY. It's also much stronger than the previous quarter's growth of 2.9% YoY.
Growth in retail sales and an uptick in consumption levels predominantly boosted China's economy. People began to flock to shopping malls and eateries after the stringent Covid-restrictions were removed.
The National Bureau of Statistics noted that sales at China's retailers witnessed an increase of 5.8% YoY in the first quarter to 11.49 trillion yuan, while retail sales, in reality, surged by 10.6% YoY in March itself. Consumption has started to recover from the beginning of this year, with retail sales increasing in both the urban and rural areas of China. Online retail sales, too, climbed 8.6% YoY in the first three months of this year.
The manufacturing side of the economy also showed considerable strength in the first quarter. Industrial output in China, which includes manufacturing, mining and utility sectors, increased by 3.9% in March compared to the same period last year. Concurrently, fixed-asset investments, or investments made by China in infrastructural and other projects to drive growth, jumped by 5.1% YoY in the first three months of 2023.
All in all, market pundits are now turning bullish on China's economy, while the Chinese government itself expects the country's economic growth to touch 5% by the end of this year, way more than last year's 3% growth, which was mostly impacted by anti-virus controls, including lockdowns. China's central bank, in the meantime, has vowed to provide ample liquidity to step up economic growth.
Thus, it's prudent for investors to place their bets on fundamentally sound China stocks like NetEase, Vipshop, Momo, KE Holdings Inc., and Trip.com Group Limited that are poised to make the most of the strength in the Chinese economy as indicated by impressive first-quarter GDP numbers. These stocks carry a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today's Zacks Rank #1 stocks here.
NetEase is an Internet technology company engaged in the development of applications, services, and other technologies for the Internet in China. NTES has a Zacks Rank #2.
The Zacks Consensus Estimate for its current-year earnings has moved up 6.6% over the past 60 days. The company's expected earnings growth rate for the current year is nearly 6%.
Vipshop is an online discount retailer for brands. The company offers branded products to consumers in China through flash sales on its vipshop.com website. VIPS sports a Zacks Rank #1.
The Zacks Consensus Estimate for its current-year earnings has moved up 9.3% over the past 60 days. The company's expected earnings growth rate for the current year is 6.5%.
Momo provides mobile social and entertainment platforms primarily in China. MOMO has a Zacks Rank #1.
The Zacks Consensus Estimate for its current-year earnings has moved up 36.2% over the past 60 days. The company's expected earnings growth rate for the current year is 18.8%.
KE Holdings is a real estate company. It provides a platform for housing transactions and services, based in China. BEKE has a Zacks Rank #2.
The Zacks Consensus Estimate for its current-year earnings has moved up 18.5% over the past 60 days. The company's expected earnings growth rate for the current year is 126.5%.
Trip.com Group is a one-stop travel service company, based in Shanghai, the People's Republic of China. TCOM has a Zacks Rank #1.
The Zacks Consensus Estimate for its current-year earnings has moved up 12.4% over the past 60 days. The company's expected earnings growth rate for the current year is 275.9%.
NetEase, Vipshop, Momo, KE Holdings, and Trip.com Group's estimated earnings growth rates for the next year are 10.7%, 5.5%, 10.8%, 39%, and 67.9%, respectively.
Shares of NetEase, Vipshop, Momo, KE Holdings, and Trip.com Group have already gained 6.4%, 115.4%, 99.1%, 52.9%, and 72.3%, respectively, over the past year.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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