Alibaba Group Holding Ltd (NYSE:BABA) stock has grabbed my attention over the last several months as everyone has seemingly turned bullish on the omni-channel retail growth narrative.  In short, BABA believes the future of retail is a true omni-channel experience.

According to Alibaba management, the future shopping model is one that incorporates in-store purchases, online ordering and both instant and delayed delivery all in the same place.

The example Alibaba management gave on their most recent earnings call is as follows. If you walk into a grocery store at lunch time with a mobile phone, you should be able to: eat at the store like a restaurant, order food “to-go” like a fast food chain or order food and have it delivered to your home later that night for dinner.

Alibaba calls this the “New Retail” model, and it’s all made possible through big data.

Each consumer activity is tracked and recorded by Alibaba. That creates a consumer activity database for every consumer. Algorithms digest that database and spit out a personalized selection of products for each consumer. This makes the New Retail process friction-less, convenient and easy for BABA consumers.

It’s a good story. But with second-quarter earnings around the corner, investors must ask themselves if Alibaba really does have it right about the New Retail model.

Let’s dig deeper and find out.

Everyone Thinks BABA Is Right About New Retail

A lot of people involved with the stock market love the New Retail idea.

The sell-side is convinced the company is right. BABA stock has received 16 back-to-back “Buy” ratings in the past month from some of Wall Street’s biggest analysts. The average price target implies just over 10% upside to about $170.

The buy-side also seems convinced. BABA stock is up nearly 80% year-to-date. That broadly outperforms the S&P 500, which is up just 10.5% so far this year. It also broadly outperforms other tech giants like Facebook Inc (NASDAQ:FB), Amazon.com, Inc. (NASDAQ:AMZN), Netflix, Inc. (NASDAQ:NFLX), and Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL), all of which are up less than 50% in 2017.

With so much bullishness surrounding BABA stock, being long certainly does feel like a crowded trade at these levels. That does add risk to the bull thesis.

But if it looks like a duck, swims like a duck and quacks like a duck, then it probably is a duck.

In this case, Alibaba stock looks like a winner, moves like a winner and it sounds like a winner.

So, BABA stock is a winner.

Alibaba is Right About New Retail

To be brief, Alibaba is right.

E-commerce is the big growth story in retail, but it’s not the whole growth story. E-commerce growth rates are actually coming down. While the law of large numbers is certainly partly at fault, there is also something else at play there.

Some consumers like the experience of shopping. Some won’t buy clothes online. Some won’t buy groceries online. Some enjoy the “touch-and-feel” aspect of brick and mortar shopping. Some consumers need in-store advice before buying a new product.

Maybe that isn’t the majority (shoppers now make about 51% of their purchases online), but it’s still a sizable chunk of shoppers.

And it’s a whole bunch of money on the table that e-commerce giants like Alibaba and Amazon have yet to tap into. According to IDC, total retail sales are expected to hit $27 trillion by 2020. E-commerce sales are expected to be only $4 trillion.

So how do e-commerce giants like Alibaba and Amazon tap into that other $23.7 trillion in global retail dollars?

Build stores, particularly in markets that have largely withstood “digitization.” That is the grocery market. It’s the home goods and building materials markets. It’s the advanced and expensive consumer electronics markets.

And why do BABA and AMZN stores have an advantage over traditional stores? Big data. Alibaba and Amazon can leverage technology and their huge audiences to deliver a more advanced, more personalized and an overall better shopping experience to consumers.

In this sense, Alibaba management is absolutely right in pushing the New Retail approach. It is the future. Not all shopping will be done online. But all shopping will be touched by technology in some regard.

The company is at the forefront of this secular transition in retail. That is bullish for BABA stock long-term.

Bottom Line on BABA Stock

Despite the huge run higher this year, Alibaba still has an attractive valuation. It trades around 25-times fiscal 2018 earnings estimates. But growth over the next year is pegged at roughly 33%. From this standpoint, BABA stock is actually trading at a marked discount to its growth potential.

That is a bullish place to be for a high-growth tech stock like BABA. FB stock was in similar territory last year, and it has roared 37% higher over the past year.

If the FY18 multiple adjusts upward to match growth, that would be a 33-times multiple on EPS estimates of $6.07. That combination gets you a $200 stock.

I don’t think that’s unlikely for this growth machine. I’m bullish on BABA stock as a long-term investment.

As of this writing, Luke Lango was long BABA, NFLX, FB, and AMZN.