Since JD.Com Inc (ADR) (NASDAQ:JD) isn’t a cloud provider or an entertainment company, it can focus on the mechanics of e-commerce with even more surgical precision than Amazon.com, Inc. (NASDAQ:AMZN).
That’s the best reason to buy JD stock. JD.com is at a much earlier point in its evolution, with U.S. revenue of “just” $17.4 billion for the last quarter, less than one-third Amazon’s total, but a similar financial profile (don’t worry about the losses) and a lot of imagination behind it.
Now might be a good time to consider your investment in JD stock. The shares are down 14% over the last month, thanks to a negative U.S. view of technology and a fourth quarter that fell just short of analyst expectations.
Remember as you read this that JD.com is not a short-term deal. I’m thinking 10 years ahead in recommending the stock, and seeing the world as it will be, not as it is.
A Long Runway for JD.com
The company’s management is aware of its long runway. It’s raising cash as fast as it can, signing new allies in drugs and food, and even getting into businesses Amazon hasn’t dreamed of entering, like international real estate rentals.
JD.com is willing to work with individual brands trying to crack the Chinese market, like Swiss watchmaker Audemars Piquet, in ways Amazon would never dream of. It’s not just building warehouses, but logistics systems that include smart scooters and drones.
China is not just becoming a bigger market than the U.S. For now, it is a younger one, with first-generation money anxious to try the finer things. China’s laws are also unitary, even more open to innovation than American laws. Want to sell liquor online? Go right ahead.
Not Just Me
I’m not the only person pounding the table for young investors to by JD stock.
Of the 38 analysts now following the stock, 27 are calling it a buy. This despite the fact most don’t expect big profits, with a mean estimate in 2019 of just 70 cents per share. It’s growth that has them predicting the stock will rise 25% over the next 12 months.
I recommended buying the company’s “dip” early in March, and that sale is still on, with the stock now trading at 15% less than it was when I last wrote about it.
The Chinese market offers JD.com, as well as rivals like Alibaba Group Holding Ltd.(NYSE:BABA), a level of stability that Amazon can only dream of.
Without well-entrenched incumbents in the Chinese shopping scene, and with everyone assumed to be carrying a smartphone with them at all times, JD.com can experiment with robot shopping carts that check the freshness of the fruit and order you a coffee to enjoy as you walk the aisles of physical stores. (It’s ahead of Amazon there, too.)
The Bottom Line on JD Stock
As an investor, it’s easy to get wrapped up in the short-term gyrations of the stock market.
Solid, long-term growth stocks, however, are usually going to pay off. Getting in on the leading edge of technology is usually going to pay off.
When I was a child growing up in the Long Island suburbs, I was surrounded by first-generation money, people who had grown up poor and were suddenly enjoying the fruits of a booming economy. That’s where the big growth is.
Put it this way. What if you could have gotten into Amazon, say, five years ago, when its total revenues were still in the $60 billion range? That’s where JD.com is right now.
If I were 26 years old again, I’d be buying JD stock with both hands.
Dana Blankenhorn is a financial and technology journalist. He is the author of the historical mystery romance, The Reluctant Detective Travels in Time, available now at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or follow him on Twitter at @danablankenhorn. As of this writing, he owned shares in AMZN and BABA.
