Vipshop Holdings Ltd – ADR (NYSE:VIPS) is a discount online retailer in China. While consumers on this side of the Pacific have little direct experience with Vipshop’s operations, investors know VIPS for its performance.
Like its more well-known brethren Alibaba Group Holding Ltd (NYSE:BABA), VIPS is all about the Chinese market. And judging by its latest numbers for the quarter and the year, the Chinese market likes what it’s getting.
Vipshop reported net revenue of $1.36 billion for Q4, a 112.2% year-over-year increase, and that number beat estimates by more than 10%.
The revenue increase means VIPS is attracting significantly more customers that are ordering more goods. VIPS also noted that its mobile platform is becoming increasingly popular, which sets up Vipshop for even more growth in coming years since the first piece of technology rising middle class consumers buy is a smartphone. In the past year, 66% of VIPS’ business came off mobile devices.
VIPS reported that the number of active customers during Q4 increased 114.2% year over year to 12.2 million customers, and the number of total orders for the quarter grew 99.6% year over year. Since 2011, over 85% of VIPS’ orders are from repeat customers, which says something about Vipshop’s business.
Net income increased 154.6% year over year to $73.4 million, and net income margin was up more than 20% for the year. These are some very bullish numbers. What’s more — Vipshop’s operating margins are stunning in the online retail sector, even compared to major players like Amazon.com, Inc. (NASDAQ:AMZN) and Alibaba.
Can VIPS continue to score these massive gains quarter after quarter into the next decade? Certainly not.
Can VIPS continue to grow at good pace for a few more years? Yes.
So, will the global economy let stocks with great growth stories right now — like VIPS — run, or will it start to punish them at the first sign of less-than-stellar growth?
Well, the one thing VIPS has going for it is it’s still small enough to grow significantly in coming years, whereas BABA and others are looking for new ways to find new customers because they have almost exhausted the domestic base.
On the technical side, VIPS is seeing higher highs and higher lows right now, which is a very bullish sign.
The biggest question is, given the sweet spot Vipshop is in right now, is VIPS a better value than BABA? Remember, major hedge funds have reported dumping massive amounts of BABA stock back into the markets after they rode the initial bump after Alibaba went public. Yet, even that selloff puts BABA and VIPS at similar valuations.
And given some of the issues that BABA is having in China and the U.S. and the fact that VIPS is growing much faster at this point, the answer points to yes — VIPS is a better buy than BABA right now.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
