Global equities are pushing higher despite the ongoing spread of the coronavirus from China. No vaccine is on the immediate horizon. And now, even U.S. senators are wondering if the disease is actually a loose biological weapon from a Chinese lab in Wuhan — the epicenter of the outbreak.
Wall Street isn’t worried, especially as some Chinese factories restarted operations this week. People might be dying, but at least iPhone production is restarting. Priorities, you know?
As a result, a number of Chinese stocks are also pushing higher. Here are three worth a look now.
Chinese Stocks: Tencent Music Entertainment (TME)
Shares of recently public Chinese music streaming company Tencent Music Entertainment (NYSE:TME) are breaking above their 200-day moving average for the first time ever. TME stock is now setting up a run at the recent high near $16.25 — which would be worth a gain of roughly 15% from here. Shares are still 30% off their all-time high just below $20.
Tencent Music offers online music streaming and karaoke services as well as music-related hardware like smart speakers and headphones.
Management recently authorized a $400 million share repurchase program and reported a 30% rise in revenues on a 40% rise in user count. Analyst coverage has been positive, with China Renaissance raising their rating to “buy” back in October. And New Street Research also initiated coverage with a “buy” rating.
Luckin Coffee (LK)
Homegrown Starbucks (NASDAQ:SBUX) competitor Luckin Coffee (NASDAQ:LK) is enjoying a share price rebound off of its 50-day moving average. Luckin is setting up a run back to its recently set high near $50 — worth a gain of about a third from here. The recent selloff consolidated the post-IPO rally, clearing the way for a resumption of the uptrend as the company’s cheaper, delivery-focused service takes market share away from Starbucks.
And headlines are’t hurting Luckin right now, either. For example, Citron Capital’s Andrew Left is normally pessimistic, but he’s much more cheerful about LK stock. He says that as fears over the coronavirus recede, Luckin could see shares rebound as high as $60.
Shares of China’s Amazon (NASDAQ:AMZN) competitor Alibaba (NYSE:BABA) are basing on support near their 50-day moving average. Alibaba is setting up a move that would push the stock well away from the sideways trading range. The company operates a number of popular online marketplaces in China including Taobao, which is like eBay (NASDAQ:EBAY), and AliExpress.
Analysts at DZ Bank initiated shares with a “buy” rating and $260 price target. Such a move would be worth nearly 20% from here.
As of this writing, William Roth did not hold any of the aforementioned securities.