I’d never have expected to say this, but some of the most exciting opportunities I’ve been finding recently are Chinese stocks. Prior to that, I’d been primarily invested in U.S. stocks for a good, long while. But when my Portfolio Grader scans started picking up “Strong Buys” in China, I jumped on them. And the results have been extremely gratifying.
Since China has largely recovered from the coronavirus, its economy is booming. The first two months of this year has already been record-breaking for China, with export production records at their highest in decades.
Chinese companies, especially the dominant e-commerce companies, have been showing huge growth so far this earnings season. For example, Alibaba Group Holdings (NYSE:BABA) reported earnings last month and showed 37% sales growth and 52% earnings growth for the fourth quarter.
Two other Chinese companies posted their earnings results this week, and neither disappointed. So, let’s take a look at their numbers in today’s Market360 article.
Daqo New Energy Corporation (NYSE:DQ) was up to bat first last Tuesday. The company is one of the lowest cost producers of high-purity silicon in the world. So, it’s not too surprising that Daqo New Energy’s polysilicon and solar wafers are in top demand with the solar PV industry, which utilize the products to develop solar power solutions.
During the fourth quarter, polysilicon production jumped to a record 21,008 metric tons, up from 18,406 metric tons in the third quarter, and polysilicon sales rose to 23,186 metric tons, up from 13,643 metric tons in the third quarter.
Fourth-quarter revenue soared 108.3% year-over-year to $247.7 million, while adjusted earnings surged 205.7% year-over-year to $1.07 per ADS. That compares to earnings of $0.35 per ADS and revenue of $118.9 million in the same quarter a year ago. The analyst community was looking for adjusted earnings of $1.15 per ADS on revenue of $232.16 million. So, Daqo New Energy posted a 7% earnings miss and a 6.7% revenue surprise.
For fiscal year 2020, Daqo New Energy achieved adjusted earnings per ADS of $2.07 and revenue of $675.6 million. That represented 195.7% annual earnings growth and 93% annual revenue growth. Analysts were expecting full year adjusted earnings of $1.99 per ADS and revenue of $690.58 million.
The stock has soared 16.4% since releasing its quarterly report, but given the increased demand for its products, I believe there’s further upside ahead.
Then JD.com (NASDAQ:JD) surged out of the gates last Thursday, following the company’s announcement that “JD saw accelerated revenue and user growth during the fourth quarter.” At the end of the fourth quarter, JD had 471.9 million active customer accounts, up 30.3% from 362 million at the end of 2019.
For the fourth quarter, JD reported earnings of $0.23 per ADS on $34.4 billion in revenue. That represented 187.5% year-over-year earnings growth and 41% year-over-year revenue growth. The consensus estimate called for earnings of $0.19 per ADS and revenue of $33.78 billion, so JD posted a 21% earnings surprise and a slight revenue surprise.
During fiscal year 2020, JD achieved revenue of $114.3 billion and earnings of $1.62 per ADS. That compares to analysts’ estimates for full-year revenue of $113.85 billion and earnings of $1.63 per ADS.
The Bottom Line
Chinese companies are the first out of the coronavirus gate, and it is showing during this earnings season. I always put my faith in the numbers. And what the numbers are telling me is that there are some great buys here right now.
All in all, my Model Portfolio Buy List is currently sitting at about a 77% return.
If you’re interested in my latest recommendations and want to get into position to take with fundamentally superior stocks, now is the time to join me here at Platinum Growth Club. My Model Portfolio and Buy Lists will be ripe for the picking, especially in the wake of their better-than-expected fourth-quarter earnings.
And there are a lot of stocks to pick from. I have more than 100 stocks across all my services to choose from, and as a Platinum Growth Club subscriber, you have full access to each and every one. (I recently unveiled an options service, Power Options, which is also included in your membership. This is a very straightforward options trading service, designed for brand-new investors and old pros alike.)
Of course, you don’t have to invest in all 100+ stocks. If you’d rather start small, I’ve got you covered there, too. My Platinum Growth Club service comes with my exclusive Model Portfolio. I handpick all of my Model Portfolio recommendations from my different stock services – Growth Investor, Breakthrough Stocks and Accelerated Profits – so you can rest assured that you’re always invested in the crème de la crème.
If you’re interested, click here for full details. If you decide to join today, not only will you have instant access to all my recommendations, but you’ll be just in time for my latest Platinum Growth Club Live Chat Event, set to take place next Monday, March 15, at noon. I will be covering my current market outlook and the fourth-quarter earnings season.
I will also review the market on the anniversary of the coronavirus lockdowns, what Wall Street is worrying about right now (and whether you should be worried, too) and give updates on several Platinum Growth Club Model Portfolio stocks. I will also take some time at the end to answer my subscribers’ questions. If you sign up now, you can send me your questions early.
The Editor (Louis Navellier) hereby discloses that as of the date of this email, the Editor (Louis Navellier), directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
JD.com, Inc. (JD), Daqo New Energy Corp. (DQ)
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation.