After a red-hot 2017 in which the stock price essentially doubled, Chinese e-commerce and technology giant Alibaba Group Holding Ltd (NYSE:BABA) hasn’t repeated on that success in 2018. Year-to-date, BABA stock has simply bounced between $170 and $200 and made very little material progress higher.

But it looks like that is about to change.

BABA stock is breaking out now thanks to a robust double-beat-and-raise fourth quarter earnings report that took away all the firepower from the bears and gave it to the bulls.

Now that bulls are back in control, it looks like Alibaba stock has a clear runway to $200 and up. This is a big growth company that is still in its relative infancy in certain hyper-growth markets like digital commerce and cloud solutions. That relative infancy implies that big growth will stay here for a lot longer, a reality that simply isn’t priced into shares at current levels.

As such, I’m a buyer of BABA stock here and now.

Here’s a deeper look.

Fourth Quarter Numbers Were Superb

BABA’s double-beat-and-raise fourth quarter report illustrated that the company continues to dominate in huge growth markets and that its growth trajectory in those markets is only improving.

For example, take the company’s massive core commerce business. Revenue growth was 62% in the quarter. That is better than last quarter (+57%) and last year (+47%). Thus, revenue growth is accelerating on a multi-quarter basis despite dramatically increasing scale.

That runs counter to the law of large numbers. As businesses get bigger, they are supposed to experience slowing growth. Not Alibaba. Alibaba’s core commerce business is actually accelerating its growth trajectory.

All that means is that Alibaba is attacking a very large commerce market — so large that Alibaba’s core commerce business is tiny relative to the addressable market. That implies big growth in core commerce is here to stay for a lot longer.

Same thing is true on the cloud computing side of things. Revenues in Alibaba’s cloud business more than doubled year-over-year. This is what they’ve been doing for the past several quarters.

Yet again, this consistently huge revenue growth despite increasing scale defies the law of large numbers. And again, all that means is that Alibaba’s opportunity in the cloud market is much larger than the size of its present business.

Because of this accelerating revenue growth trajectory, BABA stock’s biggest headwind, compressing margins, is taking a backseat. Yes, margins are compressing right now because the company is pouring billions into new markets and growth opportunities. But those investments are paying off in the form of supercharged revenue growth.

Revenues, which rose 58% this past year, are expected to rise over 60% next year.

That is impressive. So impressive that it makes near-term margin compression seem like just a bump in the road toward massive growth in the long run.

Alibaba Stock Is Materially Undervalued

BABA stock isn’t priced appropriately considering the company’s improving growth trajectory.

With revenues expected to rise 60% this year while lapping near-60% growth, it seems very likely that Alibaba achieves at least 30% revenue growth per year over the next five years. That number could be higher, but 30% seems like a good conservative baseline.

Meanwhile, margins are down now, but not forever. Eventually, today’s big-growth investments will phase out and turn into hyper-growth businesses at scale. Those businesses will have improving margin profiles. Thus, today’s 28% operating margin could easily turn toward 35% and up operating margins in five years.

That combination of 30% revenue growth and 35% operating margins leads me to believe that BABA can earn around $15.50 in earnings per share in five years. If true, BABA stock wouldn’t need that big of a multiple to justify the stock being undervalued here and now.

A market-average growth multiple of 20-times forward earnings on $15.50 implies a four-year forward price target for Alibaba stock of $310. Discounted back by 10% per year, that equates to a present value north of $210.

Bottom Line on BABA Stock

Big investments, which are weighing on margins in the near term, are paying off in the form of continued huge revenue growth. The market is taking note and pushing BABA stock higher as a result.

With bulls back in control and revenue growth back in focus, BABA stock has a clear runway to $210 and up.

As of this writing, Luke Lango was long BABA.