2. Alibaba Group Holding Limited (NYSE:BABA)
Forward P/E Ratio: 14.8
Earnings Growth This Year: 4.81%
Number of Hedge Fund Holders: 107
Alibaba Group Holding Limited (NYSE:BABA) is a technology infrastructure and e-commerce giant. It runs platforms like Taobao, Tmall, and AliExpress, which allow businesses to sell products to consumers both within China and internationally. Whereas, Alibaba.com is a wholesale marketplace connecting businesses with suppliers. The company also operates Alibaba Cloud through which it provides cloud services such as computing power, storage, and analytics to businesses of all sizes.
On February 28, Arete upgraded the stock to Buy from Neutral with a $164 price target. Alibaba Group Holding Limited (NYSE:BABA) recently gained the spotlight after Apple partnered with Alibaba to launch AI features in China. By partnering with Apple, the company has gained credibility in the AI sector, positioning itself as a major player alongside other Chinese tech giants.
Moreover, Artisan Select Equity Fund in its Q4 2024 investor letter stated that the current valuation of Alibaba Group Holding Limited (NYSE:BABA) fails to reflect the company’s true potential. The fund stated that the share price initially rose due to an unexpected stimulus package announced by the Chinese government. However, once the reality of the stimulus’s limited impact became clear, the stock price adjusted downward. However, regardless the company remains a leading player in several attractive market segments, such as e-commerce and cloud computing. It has been actively restructuring by selling off non-core businesses and returning capital to shareholders through share buybacks. This strategy is seen as positive for long-term growth. Alibaba Group Holding Limited (NYSE:BABA) is one of the best undervalued stocks to invest in now.
Artisan Select Equity Fund stated the following regarding Alibaba Group Holding Limited (NYSE:BABA) in its Q4 2024 investor letter:
“Alibaba Group Holding Limited’s (NYSE:BABA) share price decline was primarily giving back the gains from the prior quarter. Recall that all Chinese stocks surged last quarter after the Chinese government unveiled an unanticipated stimulus that temporarily captivated investors. The reality of the undersized stimulus and the challenges facing the Chinese economy eventually prevailed, leading Chinese equities—including Alibaba—to come back down to earth. Despite our concerns about China’s economic outlook, which we outlined in detail in last quarter’s letter, shares of Alibaba still represent significant value. The company is a leading player in several attractive market segments. We believe management is doing the right things, such as selling off businesses and returning capital to shareholders. It has made several changes to management and strategy that we expect will return the business to healthy growth over the coming year. In our opinion, the valuation is depressed and does not reflect a fair value for a company with these attributes.”