With trade war fears plaguing the market, Chinese stocks have been receiving some bad rap recently. But don’t let this distract you. The top China-based stocks present stellar investing opportunities. And you don’t just have to take my word for it. Here we use TipRanks to pinpoint the best Chinese stocks according to the Street. This website tracks the latest ratings from over 4,800 analysts — so we can find the most highly-rated stocks with just a couple of clicks.
If you think about it, the restrictions on foreign companies means a whole host of Chinese-equivalent U.S. stocks has sprung up. From WhatsApp to Google, China has its own parallel universe of top-notch companies. The best part is that these stocks appear seriously undervalued. It’s true that it’s much easier to invest in a company whose products you know and use. But for the more adventurous investor, these stocks have huge potential.
Here are 5 A-rated Chinese stocks to add to your wish list right now:
Top Chinese Stocks: Baidu (BIDU)
As China’s No. 1 search engine, Baidu Inc (NASDAQ:BIDU) is often nicknamed the ‘Google of China.’ Like Google, Baidu’s business interests span much more than just search. Baidu’s business covers the cloud, AI, maps, IT security and self-driving technology. The latest update: Baidu has announced a new partnership with Ford Motor (NYSE:F) to develop smarter cars for the Chinese market.
Ford will now install Baidu-powered in-vehicle infotainment systems known as DuerOS in its cars for Chinese customers. “Baidu and Ford share the vision of using technology to build the future of driving,” says Ya-Qin Zhang, president of Baidu. “Together, with Baidu’s leading-edge AI technology and Ford’s advanced engineering expertise, we will transform the mobility ecosystem and create the next-generation in-vehicle experience for consumers.”
And from a Street perspective, Baidu certainly gets the thumbs up. The stock has 100% support from top analysts specifically and a $306 price target (26% upside potential). Top Oppenheimer analyst Jason Helfstein has just reiterated his BIDU Buy rating. The “current valuation is too low for the leading Chinese search engine” argues Helfstein. He points out that BIDU is in prime place to benefit from the secular growth of China’s online ad market.
Top Chinese Stocks: Alibaba (BABA)
Chinese e-commerce giant Alibaba Group Holding (NYSE:BABA) is always one of the Street’s favorite stock picks. And this doesn’t appear to be changing any time soon. On the contrary; our data shows that in the last three months 15 analysts have published BABA Buy ratings. Couple this with a bullish $248 price target (34% upside potential) and you can see why BABA is a hot stock pick right now.
Indeed, you may get more than you bargained for. Five-star Argus Research analyst Jim Kelleher has just initiated coverage of BABA with a $275 price target. This translates into massive upside potential of 48%. Kelleher wrote, “Although BABA shares have had a strong multi-year run, we regard the stock as attractive based on mid-double-digit growth prospects for GMV [gross merchandise volume].”
But this huge sales potential still isn’t reflected in current prices: “We believe that BABA’s growth prospects are accelerating more rapidly than the share price, creating a favorable entry point. The shares also appear attractively valued. Based on peer group, historical comparables analysis, and discounted free cash flow valuation, we believe the BABA shares are attractive up to $330 and beyond.” We’re sold!
Top Chinese Stocks: BeiGene (BGNE)
China isn’t just about tech stocks. One of the country’s largest biopharmas is an excellent ‘Strong Buy’ stock idea right now. BeiGene Ltd (ADR) (NASDAQ:BGNE) is making a name for itself with cutting-edge cancer treatments. Primarily these treatments, known as BTK inhibitors, can shrink or eliminate some B cell tumors by disrupting the BCR pathway.
Top Maxim Group analyst Jason McCarthy is very encouraged by recent clinical data for the drug Zanubrutinib. He writes “BeiGene remains on track to file two NDAs [new drug applications] this year. We believe the data continues to be highly encouraging for the BTK inhibitor and we see multiple catalysts ahead across the PTK, PD1 and PARP that should, if positive push valuation higher.”
Most encouragingly, he is clear that more upside potential lies ahead. BeiGene’s valuation has risen significantly over the last year, at around ~$9B. However, McCarthy believes that “With a BTK, PD1, PARP and a pipeline of assets, as well as a partner in Celgene and a foothold on the China oncology market, we see more upside in BGNE shares.”
Indeed, McCarthy’s $225 price target indicates huge upside potential of 46%. He is one of three analysts that have published recent buy ratings on BGNE.
Top Chinese Stocks: Weibo (WB)
Welcome to Weibo Corp (NASDAQ:WB), China’s most popular multimedia micro-blogging website. The fast-growing site already boasts over 374 million monthly active users. “Weibo has established itself as a unique and sustainable social network, and we expect long-term growth in number of users and better monetization,” cheers UBS analyst Jerry Liu. “We see Weibo as Twitter but, importantly, with Instagram-like features.”
Unlike Twitter, Weibo is much more interactive with a heavy emphasis on video, photo, and live-streaming content. It is also the partner of major TV networks and users can shop online using the BABA-backed ‘Weibo Payment’. Other initiatives include virtual gifting and partnering with smartphone companies to pre-install the Weibo app. It is this “differentiated platform for users and improved ad system for advertisers” that gives Weibo huge profitability potential says Liu.
Plus note that Alibaba and another Chinese company called Sina Corp are both big stakeholders in the stock. Indeed, Weibo was spun off from Sina back in 2014. To get some idea of the stock’s growth potential we can see that the most recent rating comes from Jefferies’ Karen Chan. She has Buy rating on Weibo with a $160 price target. This means she sees prices spiking a whopping 80%.
Top Chinese Stocks: Tencent (TCEHY)
Tencent Holdings Ltd (OTCMKTS:TCEHY) is a true stock legend. The tech giant is the first Chinese company to be valued at over $500 billion. This puts it in the same league as major U.S. stocks like Facebook. And according to the Wall Street Journal, TCEHY “isn’t yet a household name in the U.S., but it should be.”
The company has its fingers in many pies from a hugely successful gaming business to music and videos. But Tencent wouldn’t be Tencent without WeChat. This is an extremely popular Chinese messaging app with almost 1 billion users. Think of a juiced-up version of WhatsApp that includes payment systems, smart city offerings such as the ability to schedule appointments, pay traffic fines or make visa applications.
“Tencent dominates consumer engagement and has a variety of tools for businesses to reach consumers,” writes KeyBanc’s Hans Chung. “It has been cautious about monetization, but we believe the opportunity is huge and achievable given the largest scale and engagement in China.” Indeed, Wells Fargo’s Ken Sena is particularly enthusiastic about the potential in video revenue and predicts a surge of video subscribers in the next five years.
From our data we can see that this ‘Strong Buy’ stock scores three recent Buy ratings from the Street. This is with an average price target of $65 (29% upside potential).
TipRanks offers exclusive insights for investors by focusing on the moves of experts: Analysts, Insiders, Bloggers, Hedge Fund Managers and more. See what the experts are saying about your stocks now at TipRanks.com. As of this writing, Harriet Lefton did not hold a position in any of the aforementioned securities.
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