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Why JD.Com Inc (ADR) Stock Has More Upside Than Amazon

As good as Amazon is, JD stock could be better

JD Stock Stock

Source: Daniel Cukier via Flickr

JD.Com Inc (ADR) (NASDAQ:JD) and, Inc. (NASDAQ:AMZN) are both growth stocks. In recent months, I’ve recommended both JD stock and AMZN stock, and I think both would be welcome additions to any investment portfolio.

However, if you could only own one of them, which is the better buy?

The Pros and Cons of

In December, I argued that JD stock remained a buy as long as it continued to turn its inventory every 38 days or faster. Successful businesses turn their inventory regularly, a sign that customers are clamoring for more product. is scheduled to report its Q4 2017 earnings Mar. 1. Keep an eye on that inventory figure. In the third quarter, it was slightly lower than in the same period last year. I expect it to continue to improve modestly, but we’ll see in a month’s time.

The other positive for JD is that it’s transitioning from money loser to moneymaker, a key ingredient to moving stock prices higher.

On the negative side of the ledger, InvestorPlace contributor Lawrence Meyers does a good job highlighting the risks of investing in Mainland China stocks.

China is a black box,” Meyers wrote recently. “You have no control over what will happen, so if you invest in a business over there, you’re taking on massive risk.”

He’s not wrong.

A few years ago, I can remember a friend telling me about a speech he attended given by the CEO of a Canadian gold company that outlined the difficulties of doing business in China.

Sure, things have gotten slightly better, but it’s still the Wild West, which ratchets up the risk.

History Helps

As I was writing this article, it suddenly dawned on me that is only four years younger than Amazon.

Amazon was founded in 1994. Today, founder and CEO Jeff Bezos is worth more than $100 billion. got its start on June 18, 1998, although it wasn’t until 2003 that founder Richard Liu started selling products online.

In my opinion, it makes sense to compare the two companies’ financial histories over the same number of years. Unfortunately, only became a public company in 2014, so I’m going to use nine years of data starting in 2009. I’ll use nine years of data for Amazon from 2005 through 2013.

May the best company win. vs – Financial History Over Nine Years

Revenue (2009) = 2.92B RMB

Revenue (2017) = 333.4B RMB

CAGR = 80.8%

Operating Profit/Loss (2009) = -103M RMB

Operating Profit/Loss (2017) = -471M RMB

CAGR = -20.9%


Revenue (2005) = $8.5B

Revenue (2013) = $74.5B

CAGR = 31.2%

Operating Profit/Loss (2005) = $432M

Operating Profit/Loss (2013) = $745M

CAGR = 7.1% vs. Amazon: A Conclusion

If you take the Amazon numbers from 2009 through 2017, the compound annual growth rate for revenue drops by more than half to 14.9%, approximately six times less than’s growth rate.

Combine the difference in growth rates with the analyst estimate that will earn $0.33 per share in fiscal 2018 and $0.75 in fiscal 2019, and you’ve got a clear winner.

Unless you’re unwilling to take the risk of owning Chinese stocks, history tells me you should go with However, if you can own both, you should.

As of this writing, Will Ashworth did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

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