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Stock Market Roundup: Chinese Stocks, Amazon, and Hexo

What's moving markets and what stocks investors are reading up on at the start of the week

Chinese stocks were a hot topic today. Though last week’s news that the White House is considering limiting U.S. investors’ portfolio flows into China gave the markets a scare, on Saturday the U.S. Treasury Department refuted the report, stating that the “administration is not contemplating blocking Chinese companies from listing shares on U.S. stock exchanges at this time.”

Stock Market Roundup: Chinese Stocks, Amazon, and Hexo
Source: Shutterstock

The statement from the Treasury ignited reader interest in how Chinese firms listed on U.S. stock exchanges have been holding up today. Additional Monday highlights include e-commerce giant Amazon (NASDAQ:AMZN) and pot stock Hexo (NYSE:HEXO).

Chinese Stocks: The Good, the Bad, and the Ugly

Starting with the good coverage around Chinese stocks: IP.com contributor Tim Biggam chalked the portfolio-limiting rumor up to fake news, encouraging investors to trade shares of iShares China Large Cap (NYSEARCA:FXI). He thinks the FXI price chart indicates a significant rally could come in the months ahead.

As the chart shows, it is usually a sign of an impending rally when all of these indicators align in this fashion. The prior four times this occurred led to a significant move higher in each instance … Stock traders should look to buy FXI stock on any weakness and use the $43 area as an upside price target.

On the other hand, contributor Wayne Duggan isn’t so optimistic about one particular Chinese stock: Nio (NYSE:NIO). Nio is down 40.1% in the past week alone after reporting lower-than-expected earnings, losing the confidence of many investors. Comparing buying Nio stock to buying a lottery ticket, Duggan thinks that NIO stock is highly speculative:

Buying NIO at this point is a bet that everything about the company, its management and its financial situation will take a dramatic 180-degree turn at some point in the near future.

The stock is plagued by bad news and ugly numbers. After earnings last week, Ian Bezek felt strongly that Nio is heading toward bankruptcy. It would take an investor with nothing to lose and a lot of chutzpah to consider buying into NIO right now.

Shipping Hurts Amazon’s Margins

Amazon credited a recent decline in operating margins to higher shipping costs. Since the company cut guaranteed delivery from two days to one and cut back its dependance on UPS (NYSE:UPS) and FedEx (NYSE:FDX) delivery services, the increase in shipping costs has led to a fall in operating margin on a year-over-year basis.

Rohit Chhatwal is not overly concerned about it as the company is investing and working hard to improve its shipping service. He wrote: “With the launch of one-day delivery, we should see another jump in the subscription revenues as the importance of Prime membership increases. This should be a big boost for Amazon stock.”

Chhatwal is confident in Amazon stock and firmly argues that investors will see an improvement in margins. “Amazon has a strong moat which will increase with its better shipping service and improve the value proposition for the Prime membership substantially,” he wrote.

Despite the shipping costs, Nicolas Chahine maintains confidence in Amazon stock as well. He states that just because the stock “isn’t a star this year,” it still has tremendous upside potential.

Hexo Promises to Meet Q4 Expectations

Hexo’s upcoming fourth-quarter earnings report will reveal a lot about where this cannabis stock is headed. No date has been set for the release yet, but management insists the company will hit its fourth-quarter goals.

Since the report is shrouded in mystery at the moment, Jamie Johnson recommends waiting it out before making a decision about buying into the stock.

Ultimately, it’s probably best to wait and see when it comes to Hexo stock. This next earnings report will reveal whether the company is able to deliver on its promises.

Though Q3 was a bit of a disappointment, Johnson notes, the company’s shares rose more than 10% after receiving a ‘buy’ rating from MKM Partners. Mixed feelings and uncertainty surrounding Q4 earnings leave investors with more of a wait-and-see approach at the moment.

That’s it for today’s commentary. Please feel free to drop us a note at editor@investorplace.com to let us know what we got right and what we got wrong. Happy investing!


Article printed from InvestorPlace Media, https://investorplace.com/2019/09/stock-market-roundup-chinese-stocks-amazon-hexo/.

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