In this article, we discuss 5 rebounding Chinese stocks to buy now. If you want to see more stocks in this selection, check out 10 Rebounding Chinese Stocks to Buy Now.
5. Melco Resorts & Entertainment Limited (NASDAQ:MLCO)
Number of Hedge Fund Holders: 24
Share Price Gain in the Last Month as of August 30: 9.61%
Melco Resorts & Entertainment Limited (NASDAQ:MLCO) was incorporated in 2004 and is headquartered in Central, Hong Kong. The company owns and operates casino gaming and resort facilities in Asia and Europe. The company bought back approximately 1.7 million American depositary shares worth about $8 million in Q2 2022. However, the Q2 results failed to meet Wall Street consensus due to COVID-19 lockdowns impacting demand. Regardless of slow demand, Melco Resorts & Entertainment Limited (NASDAQ:MLCO) stock has gained close to 10% in the last month as of August 30.
On July 5, Citi analyst George Choi reiterated a Buy recommendation on Melco Resorts & Entertainment Limited (NASDAQ:MLCO) but lowered the price target on the shares to $11 from $12.50. Most investors can look past the latest COVID outbreak in Macau and have confidence in the eventual EBITDA recovery in Macau, as per the analyst. The analyst said that the positive investor sentiment is supported by the “much-lower-than-anticipated regulatory risks” after the Legislative Assembly’s passing of the Gaming Law amendments in June. In the short-term, the analyst believes the license re-tender potentially scheduled for August could be the next positive catalyst to re-rate Macau stocks “to the next level”.
Among the hedge funds tracked by Insider Monkey, Ricky Sandler’s Eminence Capital is the leading stakeholder of Melco Resorts & Entertainment Limited (NASDAQ:MLCO) as of Q2 2022, with 11.5 million shares worth about $66.5 million. Overall, 24 hedge funds were long Melco Resorts & Entertainment Limited (NASDAQ:MLCO) at the end of June, compared to 26 funds in the prior quarter.
4. ATA Creativity Global (NASDAQ:AACG)
Number of Hedge Fund Holders: N/A
Share Price Gain in the Last Month as of August 30: 38.92%
ATA Creativity Global (NASDAQ:AACG) was founded in 1999 and is headquartered in Beijing, China. The company provides educational services through its training center network in China and internationally. Chinese stocks including ATA Creativity Global (NASDAQ:AACG) gained after the China Securities Regulatory Commission and U.S. Public Company Accounting Oversight Board penned an agreement where US-listed Chinese firms can be audited by US authorities. ATA Creativity Global (NASDAQ:AACG) stock has climbed about 39% in the last month as of August 30.
3. Luckin Coffee Inc. (OTC:LKNCY)
Number of Hedge Fund Holders: N/A
Share Price Gain in the Last Month as of August 30: 39.53%
Luckin Coffee Inc. (OTC:LKNCY) is a Xiamen-based company that serves freshly brewed coffee and non-coffee drinks in the People’s Republic of China. The stock gained about 5% on August 26 when the company reported that it fully redeemed $110 million worth of senior notes to help it lower its interest cost. In an approximate forecast, Quo Vadis Capital analyst John Zolidis sees roughly $1 billion in cash for Luckin Coffee Inc. (OTC:LKNCY) at the end of 2022, as well as a market cap of around $4.1 billion. On August 8, the company posted a Q1 revenue of RMB 3.3 billion, compared to RMB 1.9 billion in the prior year quarter. The stock has gained about 40% in the last month as of August 30.
2. Pinduoduo Inc. (NASDAQ:PDD)
Number of Hedge Fund Holders: 41
Share Price Gain in the Last Month as of August 30: 36.75%
Pinduoduo Inc. (NASDAQ:PDD) is a Shanghai-based company that operates an e-commerce platform in China, selling apparel and accessories, mother and baby products, food and beverages, electronic appliances, furniture and household goods, sports and fitness items, and auto accessories. On August 29, Pinduoduo Inc. (NASDAQ:PDD) stock soared 14% on the back of solid Q2 results. The company earned about 93 cents per share on a revenue of $4.7 billion in the second quarter of 2022. Pinduoduo Inc. (NASDAQ:PDD) stock has surged about 37% in the last month as of August 30.
BofA analyst Joyce Ju on August 30 raised the price target on Pinduoduo Inc. (NASDAQ:PDD) to $89 from $77 and reiterated a Buy rating on the shares. The company posted “robust” Q2 results with primary marketplace revenue growth climbing to 49% year-over-year, the analyst told investors in a research note. The analyst lifted estimates to factor in rapid growth, greater monetization, and higher leverage.
According to Insider Monkey’s data, 41 hedge funds were bullish on Pinduoduo Inc. (NASDAQ:PDD) at the end of June, up from 36 funds in the preceding quarter. Rajiv Jain’s GQG Partners is the leading stakeholder of the company, with 6.15 million shares worth about $381 million.
Here is what Tao Value has to say about Pinduoduo Inc. (NASDAQ:PDD) in its Q4 2021 investor letter:
“On the detracting side, one of our largest detractors includes Pinduoduo (ticker: PDD). Pinduoduo (PDD) reported the second consecutive GAAP profit quarter yet missed on the revenue due to nation-wide consumption weakness & scaled back Sales & Marketing efforts. Market disliked it and the stock price plunged on the earnings. In my opinion, the accounting profits proved the original thesis of using S&M to acquire users and using great shopping experience to keep them. After realizing the first growth curve, Pinduoduo now shifted its focus & investment to agriculture. It is still very early, but the reduced size due to price drop warrants a position to watch and continue to grow with such a team with a strong culture.”
1. JD.com, Inc. (NASDAQ:JD)
Number of Hedge Fund Holders: 62
Share Price Gain in the Last Month as of August 30: 4.74%
JD.com, Inc. (NASDAQ:JD) is a Beijing-based company that offers computers, consumer electronics, home appliances, and general merchandise products through online retail channels. In Q2 2022, the company earned an adjusted 61 cents per share on $40 billion in revenue, up 5.4% year-over-year. The company added almost 50 million customer accounts in the past 12 months. JD.com, Inc. (NASDAQ:JD) stock has gained about 5% in the last month as of August 30.
Benchmark analyst Fawne Jiang on August 24 raised the price target on JD.com, Inc. (NASDAQ:JD) to $109 from $106 and kept a Buy rating on the shares. JD.com, Inc. (NASDAQ:JD) reported above consensus Q2 results, featuring a solid bottom-line beat and a Q3 retail growth guidance slightly under expectations due to ongoing macro headwinds, the analyst told investors. Compared with its peers, the analyst believes the drivers for JD.com, Inc. (NASDAQ:JD)’s margin improvements are sustainable.
According to the second quarter database of Insider Monkey, 62 hedge funds were bullish on JD.com, Inc. (NASDAQ:JD), up from 59 funds in the prior quarter. Chase Coleman’s Tiger Global Management is the largest stakeholder of the company, with 30.5 million shares worth about $2 billion.
Here is what Argosy Investors has to say about JD.com, Inc. (NASDAQ:JD) in its Q3 2021 investor letter:
“We sold JD as a result of the furor over Chinese stocks during the quarter. We had been concerned about China’s lack of respect for investor rights for some time, and Beijing has become significantly more aggressive in asserting itself of late. In addition, the legal structure Chinese companies use to come public in the U.S., a Cayman Islands shell corporation leaves American investors with an unsure path to recovering value should these companies cease to trade on U.S. exchanges. Because of the uncertainty, we exited our position in JD completely. We still love JD’s long-term prospects, but we cannot estimate the legal/regulatory risk associated with these companies anymore. More broadly, we are freeing up cash for some other positions we already own which have declined in this market, and after additional review, remain attractive.”
You can also take a look at Best Value Stocks to Buy for the Next Decade and Best Cheap Tech Stocks.
