I have been bullish on Chinese e-commerce giant JD.Com Inc(ADR) (NASDAQ:JD) for quite some time. Despite the China retail growth narrative only strengthening over the past several months, JD stock has simply tread water since June 2017. That doesn’t make much sense to me.

JD’s numbers have been good. Top-line growth rates remain red-hot, while the margin expansion narrative looks as promising as ever. Meanwhile, the valuation remains reasonable considering robust growth prospects.

Overall, the discrepancy between strengthening fundamentals and a weakening stock price have made me quite bullish on JD.Com stock.

Now, JD stock is breaking out. It is up nearly 20% since the start of December.

Moreover, the 20-day exponential moving average has strongly crossed back above the 50-day exponential moving average after spending months below the 50-day EMA. That last time this specific golden cross pattern emerged (20-day EMA breaks out above 50-day EMA after spending months below the 50-day EMA) was in mid-2016.

JD stock proceeded to rally from the low-20’s to the high-40’s over the next 12-plus months.

I think a similar rally will unfold over the next 12 months. Here’s why.

Long-Term Bull Thesis Remains Intact

The heart of the bull thesis on JD stock is that JD.Com is one of two major players (Alibaba Group Holding Ltd (NYSE:BABA) being the other) set to hugely benefit over the next several years as the China retail market continues to explode.

The breakdown of that long-term bull thesis is pretty simple.

China’s retail market is growing at a rather robust 12% per year. Most of that growth is coming from the digital channel, which has increased retail penetration from 6.2% in 2012 to 14% today. That means digital retailers, like JD.Com, are the big winners. This growth will continue. Digital sales growth in China into 2019 is expected to be 16% per year.

Moreover, the biggest beneficiaries of this retail boom will be the big players. As retail markets mature, they also tend to consolidate around a few large players because those large players tend to eat market share and squeeze out smaller competition. Just look at the United States, where the top 20 retailers control 45% market share.\

In China, the top 20 retailers control only 12% market share. That means that over the next several years, big retailers will substantially grow market share in a booming market. JD is one of the biggest retailers in China by a long shot, implying out-sized revenue growth over the next several years.

This whole thesis remains in-tact, and thus, JD stock remains a long-term winner.

JD.Com Is Making All the Right Moves

But JD stock could also be a big winner in the near term.

Investors are starting to get excited about recent moves JD.Com has made in order to ensure optimal success in the booming China (and even global) retail market.

Namely, JD.Com is making a big offline retail push. Following in the footsteps of Amazon.com, Inc. (NASDAQ:AMZN) and Alibaba, JD.Com is plunging into the grocery world. The traditional digital retailer plans to open 1,000 fresh food stores over the next 3-5 years.

This is big for multiple reasons.

Firstly, as evidenced by the recent moves of Amazon, Alibaba, and JD as well as the surge in 2017 holiday retail sales in the US, offline retail is still a very big component of the broad retail picture. In other words, not everyone does all of their shopping online. An offline retail presence is critical. JD.Com is finally establishing this offline presence.

Secondly, JD.Com is also set up perfectly to do groceries because of its massive logistics network. JD can leverage its logistics network to do grocery delivery quickly and efficiently.

Thirdly, JD’s new grocery stores will be a lot like Whole Foods Market, Inc. (NASDAQ:WFM) with a bunch of cool technology, ensuring that these won’t just be more regular grocery stores.

JD is intent on serving premium offerings and integrating technology like “magic mirrors” into the stores (these mirrors will sense when an item is picked up, and subsequently provide information about that item). That differentiates both the product offering and experience of JD’s grocery stores, ensuring that they won’t be commoditized in the near future.

Lastly, and perhaps most importantly, China’s grocery market is the largest in the world. And US per capita food spend is still more than four times as great as China’s per capita food spend, implying that his large market could experience exponential growth as China consumers start to act more like American consumers.

JD.Com is now more deeply tapping into this huge and growing market.

All in all, JD’s offline push into groceries is a big move for the company that implies long-running benefits.

Bottom Line on JD Stock

Recent moves into offline retail via grocery stores will provide a nice near-term boost to the stock price, but the big benefits of this move are long-running in nature.

Consequently, the long-term bull thesis on JD as a big winner in a secular growth market is only strengthening. I continue to believe that JD stock is a name to own for the long run.

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