10 Best Undervalued Stocks to Buy According to Reddit

2. Alibaba Group Holding Limited (NYSE:BABA)

Investors on Reddit that consider the stock undervalued: 12

Alibaba Group Holding Limited (NYSE:BABA) is a Chinese multinational company with expertise in e-commerce, retail, and technology. It provides business-to-business (B2B), business-to-consumer (B2C), and consumer-to-consumer (C2C) sales services through global marketplaces, cloud-computing services, logistics, and digital media and entertainment, among other offerings. During the fourth quarter of FY2024, the company beat both earnings and revenue estimates due to a solid show in its international wholesale and commerce retail businesses. The EPS was posted at $1.40, surpassing estimates by 12.9%. Its revenue totaled $30.73 billion, which was 7% higher YoY.

However, the company has been struggling for a while. Lackluster financial performances over the past few years coupled with uncertainties in China have hurt the investor sentiment around the stock. Its e-commerce business has suffered as Chinese consumers become more price-conscious amid a global slowdown. Alibaba Cloud remains a significant player but is losing its market share to competitors such as Amazon, Microsoft, and Alphabet. According to Wall Street analysts, the company’s earnings are only expected to grow at a CAGR of 1.7% over the next five years.

Nevertheless, bulls remain optimistic about the stock rebounding provided the situation improves in China. Alibaba Group Holding Limited (NYSE:BABA)’s share price has been increasing since it shifted back to focus on domestic e-commerce and invested in AI, cloud computing, and expansion into other foreign markets. Shares price has jumped 5% since founder Jack Ma returned to public view in April this year. There is consensus among rating firms about the stock having a Strong Buy rating, with an average price target of $107.15, which will represent an upside of 42.35% from its current levels. Another vital factor driving their forecasts is the company’s strong cash flow position; it finished the year with a cash on hand of $34.37 billion.

Baidu analyst Colin Sebastian shared the following remarks about Alibaba Group Holding Limited (NYSE:BABA) in May:

Alibaba is focused on recapturing e-commerce market share in China, and capitalizing on momentum in international commerce and cloud computing building on strong growth in cross-border volumes, and accelerating revenues in public cloud.

It is one of the best undervalued stocks to buy according to Reddit. This is seconded by Insider Monkey’s hedge funds data for Q1 2024, with 103 hedge funds bullish about the company.