U.S. equities are rebounding on Tuesday, with the Dow Jones Industrial Average finding support at its 50-day moving average. Newsflow remains light as the staff shakeup at the White House moves into the rear-view mirror and investors look ahead to the start of the Jackson Hole central bank symposium later this week.
But above and beyond the action in American stocks has been the surge in Chinese stocks over the last few days with the iShares China (NYSEARCA:FXI) pushing back to its early August highs — testing levels last seen in 2015. Hedge fund types are pilling in, according to Goldman Sachs, with a basket of U.S. big-tech and Chinese stocks outperforming the S&P 500 Index by some 7% for the year-to-date.
With an upside breakout looking likely, here are three Chinese stocks to watch:
Chinese Stocks Rushing Higher: Alibaba (BABA)
Chinese online ecommerce giant Alibaba Group Holding Ltd (NYSE:BABA) is enjoying another near 3% gain on Tuesday, extending a parabolic rise out of its late December low that has seen shares nearly double. Analysts at UBS believe shares can push to the $200-a-share level on solid management execution and the marriage of content and data driving higher engagement and monetization across its platform. Runway includes expanding ecosystem via logistics, media consumption, international commerce and cloud computing.
BABA will next report results on Nov. 1 before the bell. Analysts are looking for earnings of $1.04 per share on revenues of $7.7 billion. The stock enjoyed an upgrade to overweight from analysts at Atlantic Equities.
Chinese Stocks Rushing Higher: Weibo (WB)
Chinese social media icon Weibo Corp (ADR) (NASDAQ:WB) — also known as the Chinese version of Twitter Inc (NYSE:TWTR) — is surging above the $90-a-share level for the first time this week, pushing the gain from the August 2015 low past nine-fold. Barclays analysts are looking for WB stock to hit $100 after reporting solid quarterly results, strong forward guidance and an accelerating “third engine” of growth from things like membership, gaming and data.
The company will next report results on Nov. 20 before the bell. Analysts are looking for earnings of 45 cents per share on revenues of $296 million. When the company last reported on Aug. 9, earnings of 38 cents per share beat estimates by 5 cents on a 67% year-over-year rise in revenues.
Chinese Stocks Rushing Higher: New Oriental Education (EDU)
Shares of New Oriental Education & Tech Grp (ADR) (NYSE:EDU), a provider of private education services in China, are surging up and out of a three-month consolidation range to test above the $85-a-share level. This represents a fourfold increase from the lows hit in 2015. Coverage was initiated by UBS earlier this month with a Buy rating.
EDU will next report results on Oct. 24 before the bell. Analysts are looking for earnings of $1.07 per share on revenues of $648 million. When the company last reported on July 25, earnings of 41 cents per share beat estimates by 3 cents thanks to a 37% increase in enrollment in tutoring and test prep courses.
Anthony Mirhaydari is founder of the Edge (ETFs) and Edge Pro (Options) investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.
