7 Best Consumer Cyclical Stocks To Buy According to Hedge Funds

3. Alibaba Group Holding Limited (NYSE:BABA)  

Number of Hedge Fund Investors: 91

Alibaba Group Holding Limited (NYSE:BABA) is a Chinese multinational conglomerate specializing in e-commerce, technology, and digital payments. The company operates one of the world’s largest online marketplaces, including Aliexpress, Alibaba, Lazada, Taobao, and Tmall. Alibaba Group Holding Limited (NYSE:BABA) has a diverse business interest in areas such as logistics, digital entertainment, and artificial intelligence. The company is also a leader in cloud computing through Alibaba Cloud.

For the quarter that ended on June 30, Alibaba Group Holding Limited (NYSE:BABA) reported a revenue of $33.47 billion, an increase of 4% year-over-year. The company’s revenue from Cloud Intelligence increased 6% year-over-year to $3.65 billion. Alibaba Group Holding Limited’s (NYSE:BABA) China commerce wholesale business increased 16% to $819 million, whereas revenue from Alibaba Group Holding Limited’s (NYSE:BABA) International Digital Commerce Group (AIDC) grew 32% year-over-year to $4.03 billion.

The strong performance was driven by the growth of cross-border businesses, in particular the Choice business on AliExpress. Industry analysts are bullish on the company’s stock price and have a consensus Buy rating at a target price of $118.33, which implies a 14.40% increase from its current level.

In their Q3 investor letter, Capital Management said the following regarding Alibaba Group Holding Limited (NYSE:BABA):

“Alibaba Group Holding Limited (NYSE:BABA) experienced a massive rebound gaining +47% in the quarter following the announced stimulus program from the Chinese government. As the unexpectedly strong government support was announced, shorts were reversed and any name exposed to China was off to the races. We have long liked Alibaba as the company has continued to trade at a significant discount to its sum-of-the-parts valuation. With most investors writing off Chinese companies entirely, you had an opportunity to invest in a high-quality business at rock bottom prices. Over that time, the company initiated both a dividend (0.9% Yield) and buyback program, repurchasing 9% of shares outstanding over the last twelve months. Despite the strong move in the quarter, the company trades at just 12.4x next-year’s earnings. We see potential for continued multiple expansion as the Chinese economy rebounds and the country becomes investable again.”