Did you know that China has its own Amazon marketplace?
It turns out the convenience of buying online and having stuff just show up on your doorstep is universally loved. It makes life so much easier… And it doesn’t matter whether you’re buying household goods, gifts, or even high-end electronics.
The folks in China love the convenience just as much as we do here in America… In fact, that’s why the world’s most populated country also has become the world’s largest e-commerce market.
In China, one company in particular operates a business nearly identical to Amazon’s here in America. And today, I’ll share why you have an incredible opportunity to buy that business right now.
In short, I see potential upside of more than 30% in the next year with the “Amazon of China.” That means it’s one of the best opportunities in the markets as we head into 2022.
Let me explain…
The Amazon of China is JD.com (JD).
JD.com was founded in 2004. It operates as an e-commerce company and retail infrastructure services provider in China. According to JD.com’s website, it’s the country’s largest online retailer and its biggest retailer. It’s also the country’s biggest Internet company by revenue.
And importantly, JD.com’s stock trades on the New York Stock Exchange here in the U.S.
Now, as you might already know, China isn’t the easiest place to do business due to frequent government intervention. And JD.com’s stock was beaten down for much of this year on fears of increased regulation from the government… The Chinese Communist Party doesn’t want companies leaking sensitive data to foreign entities.
The sell-off came after the U.S. passed legislation that would subject Chinese companies listed on U.S. exchanges to the U.S. Public Company Accounting Oversight Board. In short, the U.S. wants to check the work of these companies’ auditors.
JD.com’s stock reached an all-time high of around $107 per share in February. Then, thanks to these rising fears, it plunged more than 40% down to around $62 per share in August.
But the thing is… because of this perceived risk, our potential reward is excellent today.
Put simply, these fears are likely overblown… JD.com is one of China’s largest online retailers. It’s the Amazon of China. And barring the end of the world, it’s not going anywhere.
In fact, JD.com has already started to recover…
The stock is up around 27% off its August bottom. It closed yesterday at $78.05 per share. Notice the series of “higher lows” in the following chart…
These recent gains don’t mean we’ve missed the boat, though. Even better, this type of uptrend shows us that the stock has momentum… And as a result, we can expect more gains from here.
For JD.com’s stock to return to its all-time high of nearly $107 per share, it would need to rise another 37%. And if it can get past the recent regulatory fears, it could go even higher.
The simple truth is that JD.com’s core business is strong. We received proof of that on November 18 when the company released its most recent earnings report…
The company reported weaker earnings due to increased costs. But importantly, its top-line revenue growth was strong at 25.5%. And the market liked the news… The stock rose 6% on the day.
That’s no surprise… The Amazon business model is a quality-of-life changer around the world. And JD.com has done an incredible job building that business in China.
With the stock rebounding after selling off earlier this year, we could see additional upside of 30% or more from here. And fears of aggressive regulation from China appear to be overblown.
That’s why it’s a fantastic opportunity as we head into 2022.
Good investing,
Pete Carmasino
