We recently published a list of 10 Cheap Chinese Stocks to Buy Now. In this article, we are going to take a look at where ZTO Express (Cayman) Inc. (NYSE:ZTO) stands against other cheap Chinese stocks to buy now.
Chinese Market Outlook 2025
On February 12, Russell Investment released its Chinese market outlook for 2025. The investment firm noted that the outlook for China in 2025 is marked by several key factors, including the potential for new stimulus measures, advancements in artificial intelligence, and the impact of US tariffs on Chinese exports. Investors are closely watching whether the Chinese government will implement additional economic support measures, similar to those seen in 2024. This year, however, the landscape is complicated by the introduction of the DeepSeek AI model and the imposition of US tariffs on Chinese goods.
As per the report, the property sector remains a significant drag factor to China’s economy, with developers facing pressure and consumers cautious about purchasing property. Despite this, there are tentative signs of improvement in secondary home transactions, suggesting that supportive measures from 2024 may be starting to take effect. However, consumer confidence remains low, nearing the lows of the past four years. Moreover, the economy is also at risk of deflation, which could lead consumers to delay major purchases in anticipation of further price drops.
Russell Investment further noted that the National People’s Congress meeting in March will be crucial, as it will announce the economic growth target for the year and any new policy measures. If a growth target of around 4.5% is set, substantial stimulus measures may be required to achieve it. The United States has imposed a 10% tariff on Chinese imports, which China has responded to by placing tariffs on $14 billion worth of US goods. These tariffs are expected to reduce China’s GDP growth by about 0.3 percentage points.
On the bright side, China has seen significant advancements in AI, with companies like DeepSeek achieving notable gains. However, the export embargo on major chip manufacturers by the US poses a challenge to further AI development in China. The focus is likely to shift towards efficiency improvements in AI capabilities. Russell Investments views the outlook for Chinese equities as marginally positive. This assessment is based on a cycle, valuation, and sentiment framework. Despite economic uncertainties, Chinese companies have improved their return on equity, and analysts expect about 9% earnings-per-share growth in 2025. Valuations for Chinese equities appear reasonable compared to other emerging markets, with forward multiples at around 10 times and a PEG ratio at the 15th percentile historically.
Our Methodology
To compile the list of 10 cheap Chinese stocks to buy now, we used the Finviz stock screener, Yahoo Finance, and Seeking Alpha. Using the screener we aggregated a list of stocks trading below the forward P/E of 15 and earnings growth expectations this year. Next, we cross-checked the Forward P/E from Seeking Alpha and Earnings growth from Yahoo Finance. Lastly, after sorting our list by market capitalization, we ranked the stocks in ascending order based on the number of hedge funds holding each stock, sourced from Insider Monkey’s Q4 database of hedge funds.
Why are we interested in the stocks that hedge funds pile into? 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A fleet of trucks speeding along an interstate highway delivering goods to distant customers.
ZTO Express (Cayman) Inc. (NYSE:ZTO)
Forward P/E Ratio: 12.22
Earnings Growth This Year: 12.59%
Number of Hedge Fund Holders: 23
ZTO Express (Cayman) Inc. (NYSE:ZTO) is a Chinese company, specializing in providing fast and efficient delivery services across China and beyond. It operates through Express Delivery Services and Logistic Services, which helps move packages quickly from one place to another, using a large network of sorting centers and transportation routes. It operates both within China and in international markets through partnerships.
In its fiscal third quarter of 2024, the company grew its revenue by 17.6% to RMB 10.68 billion and gross profits by 23.2% to reach RMB 3.34 billion. The growth was driven by increased parcel volumes, which grew by 15.9% year-over-year to reach 8,723 million parcels. During the quarter, ZTO Express (Cayman) Inc. (NYSE:ZTO) maintained over 31,000 pickup and delivery outlets and more than 6,000 direct network partners. Looking ahead, it aims to preserve its leadership in volume and market share while enhancing service quality and profitability. Management projects parcel volume growth between 11.6% and 12.3% for 2024, reflecting strategic adjustments to market dynamics. It is one of the best cheap Chinese stocks to buy now.
Overall, ZTO ranks 7th on our list of cheap Chinese stocks to buy now. While we acknowledge the potential of ZTO 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 ZTO 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.
