Don't be scared to trade China.
As the trade war volatility escalates between the U.S. and China, Trump has added more fuel to fire with his latest offensive to restrict Chinese investment in U.S. tech companies. Nevertheless, it seems China is still steaming ahead with its core strategy of innovation and technological reliance.
Chinese e-commerce powerhouse Alibaba has eclipsed the headlines for all the right reasons. CNN recently reported that Alibaba has joined the top 10 of the world's biggest brands and ranked at number nine alongside Chinese tech group Tencent (TCEHY) , Google (GOOGL) and Apple (AAPL) . The report cited how Alibaba "has seen its brand value nearly double to $113 billion as it has expanded further into fields like mobile payments and cloud computing."
Alibaba has also lept into the spotlight for a series of aggressive developments, such as "leading a consortium of investors to buy about 10 percent of Chinese courier ZTO Express (Cayman) for $1.38 billion." This strategy by Alibaba Executive Chairman Jack Ma should help the company build an efficient logistics network.
Unsurprisingly, Alibaba has also received positive scores from the Street. Based on ratings from 12 top-performing analysts, the stock scores a strong buy consensus. Plus, Alibaba received an impressive average 12-month price projection of $250.50 (22% upside potential from current levels). For example, MKM Partners analyst Rob Sanderson has just elevated his price target to $280 from $260 previously. Sanderson cited the e-commerce company's strong quarter and encouraging outlook.
He also highlighted this: "investor focus is shifting from investment spending to profitability and long-term opportunity, with the core commerce segment showing a healthy performance."
Watch more about Alibaba's business below.
Baidu has also been thrust into the limelight for a succession of intriguing developments.
In a move that signals Baidu's plans for expansion into the world of blockchain, the company's blockchain division announced a new 'Superchain' protocol, which aims to reduce mining energy consumption. Baidu has also inked a new contract to divest it's global DU ads and tools apps and signed a new agreement for its Financial Services Business.
On the back of these growth drivers, Baidu boasts a bullish strong buy consensus from the Street. Based on five top-performing analyst buy ratings, the stock has a $299.80 12-month average price projection (20% upside potential). The analyst sentiment for the internet giant has also been generally bullish. Oppenheimer analyst Jason Helfstein maintains a success rating of 70% on Baidu's stock and recently reiterated a buy rating, with price target of $295 (18% upside).
Although the company was hit with reports that its chief operating officer Lu Qi, who oversaw the artificial intelligence (AI) expansion sector, stepped down last week, Helfstein isn't fazed. He cited numerous reasons to stay bullish, including: "(1) core revenue (AI-driven Search & Feed) should remain strong, as Search leadership is unchanged; (2) strategic restructuring almost complete (reduced O2O losses, sale of Baidu Delivery, IPO of iQiyi and planned spin-off; and (3) concerns on spending discipline post-Qi are exaggerated, in our view."
Other top analysts like Goldman Sachs's Piyush Mubayi upgraded his rating to buy with a price target of $319. Mubayi cited a re-acceleration in core search, improved capital allocation, and progress in DuerOS autonomous driving project with Apollo as his thesis.
Chinese e-commerce giant and fierce Alibaba rival, JD.com, has also received a strong buy consensus rating from the Street. The digital retailer specializes in electronics products, home appliances, digital communications, computers, apparel, and more. Although the momentum for JD.com's stock declined in the last three months from factors such as warehouse issues and a ramp up in competition from the crowded Chinese e-commerce market, sentiment seems to be shifting favorably.
Top-performing Stifel Nicolaus analyst Scott Devitt believes that JD.com's stock is set for recovery and cited numerous reasons, such as net product revenue growth and accelerated net services revenue. He believes this is being fueled by merchant advertising revenues and logistics services.
Devitt holds a 77% average success rating and maintained a buy rating on JD.com with a price target of $50 (31% upside potential).
Plus, JD has a number of interesting growth drivers and initiatives in the pipeline. JD recently expanded to Australia and announced the launch of a joint blockchain traceability program with Australian firm InterAgri that leverages blockchain technology. There are also reports that CEO Richard Liu is aiming to improve the company's delivery networks. As part of this strategy, JD.com plans to establish 180 drone airports in China to help speed up delivery and help the company save money.
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