We recently published a list of 12 High Growth International Stocks to Invest in Now. In this article, we are going to take a look at where JD.com, Inc. (NASDAQ:JD) stands against other high growth international stocks to invest in now.
What To Expect From The Stock Market in 2025?
On January 15, Jurrien Timmer, Director of Global Macro at Fidelity Management & Research Company shared his outlook for 2025. He believes that the market has lost some of its momentum as the prospects of more rate cuts in 2025 have gone slimmer. One of the reasons for less likely rate cuts came a few weeks ago with a stronger-than-expected job market report, which sparked a market dip. Moreover, on the same day, long-term interest rates went higher. The 10-year treasury yield climbed closer to the 5% mark which has haunted stocks in the past.
However, Timmer believes the market is still in a bull phase, primarily driven by rising earnings, which he expects will continue to support market growth. This optimism is grounded in the historical performance of bull markets, where earnings often play a crucial role in sustaining upward momentum. He pointed out that as bull markets mature, they typically experience greater volatility. This means that even minor disruptions can lead to significant market fluctuations. High price-to-earnings (P/E) ratios contribute to this sensitivity, as elevated valuations can make the market more susceptible to corrections. Timmer also highlighted his concerns over interest rates, specifically, the Fed’s ability to cut rates, which are likely to persist. This “interest-rate angst” could continue influencing market behavior throughout the year, as investors will continue to grapple with how rate changes can affect stock valuations and overall economic conditions.
Moreover, Timmer also discussed the shifting dynamics in the stock market, particularly focusing on the transition from a narrow leadership group to a broader market participation. He noted that in the latter half of 2024, there was a notable shift in market leadership from the “Magnificent 7”, to a wider array of stocks. This broadening indicates that more sectors and companies are contributing to market gains, which is generally seen as a positive sign for overall market health. However, since mid-December, following the Fed’s reduced expectations for interest rate cuts, the market has lost momentum, as only 24% of stocks were trading above their 50-day moving average, and just 29% of S&P 500 stocks were outperforming the index. This indicates a narrowing participation in market gains, which is concerning for investors who prefer broad-based growth.
While talking about large-cap stock performance, Timmer raises the question of whether this trend of narrow leadership will persist. He suggested that trends continue to move in the same direction until a significant change occurs. Given that large-cap growth stocks have dominated for years, it is reasonable to assume that they may continue to lead. However, he also cautioned the investors that as per the concept of mean reversion, asset prices will eventually return to their historical averages and when this happens, it could lead to sharp corrections in stock prices. Timmer believes that while 2024 was a “Goldilocks year,” for earnings and valuations, this year can be a tussle between higher earnings and rising long-term interest rates, thereby resulting in a volatile market.
Our Methodology
To curate the list of 12 high-growth international stocks to invest in now, we used the Finviz stock screener and Seeking Alpha. We used the screener as a starting point of our research to get (Ex-USA) stocks that have grown their revenue by more than 15% during the last 5 years. Next, we checked these stocks for 10-year revenue growth rates from Seeking Alpha and selected only those stocks that had grown by more than 25% during the last decade. Lastly, we ranked the stocks in ascending order of the number of hedge fund holders sourced from Insider Monkey’s third-quarter database.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A wide and imposing view of a supply chain distribution center, illustrating the company’s technology capabilities.
JD.com, Inc. (NASDAQ:JD)
10-Year Revenue Growth Rate: 27.25%
Number of Hedge Fund Holders: 75
JD.com, Inc. (NASDAQ:JD) is a leading Chinese e-commerce platform, which offers a wide range of products including home appliances, electronics, and other general products. Due to its robust supply chain networks, the company has established itself as a key player in the international retail and logistics industry.
On January 22, Joyce Ju, an analyst at Bank of America Securities, reiterated a Buy rating on the stock, keeping the price target at $48. Ju’s analysis of JD.com, Inc. (NASDAQ:JD) is based on expectations for a strong performance in the fourth quarter of 2024, driven by government subsidies and successful promotional activities. Analysts expect the company to achieve a 10.1% year-over-year revenue growth with an 18% increase in profit margins.
The company reported strong financial performance during the third quarter of fiscal 2024. Growth in general merchandise and a turnaround in the electronics and home appliances categories drove revenue to RMB 260 billion, indicating a 5% increase year-over-year. Moreover, gross profits also improved 16% year-on-year with ongoing cost efficiency efforts in logistics contributing heavily. It is one of the high-growth international stocks to invest in now.
Ariel Global Fund stated the following regarding JD.com, Inc. (NASDAQ:JD) in its Q3 2024 investor letter:
“China-based E-commerce company, JD.com, Inc. (NASDAQ:JD) was the top contributor in the quarter as the People’s Bank of China’s (PBOC) comprehensive stimulus measures bolstered investor confidence in the Chinese economy. The improving economic sentiment is fueling consumer spending which benefits the company’s retail operations. Additionally, the company’s strategic decision to diversify general merchandise product offerings, expand its third-party marketplace business and monetize advertising streams has contributed to consecutive quarterly earnings beats. JD.com is also poised to capitalize on the home appliance trade-in program, which is one of its largest product categories. Given the favorable market environment, the company’s strategic positioning and supply chain efficiency improvements, we continue to like its long-term growth prospects.”
Overall, JD ranks 2nd on our list of high growth international stocks to invest in now. While we acknowledge the potential of JD to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than JD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
