Alibaba Group Holding (BABA)

Has had a great growth run. Revenues in the last quarter were up 61%. They dominate the Chinese market, which Amazon (AMZN-Q) is not able to get into. There are concentration risks, because it has been such a wonderful performer over the last 2 years. Because it doesn't pay a dividend and because it is part of the momentum stocks, if you doubled your money he would have no problem taking half off the table and letting the rest run.

This is right in the heart of e-commerce alongside of Amazon (AMZN-Q). It really is a juggernaut, growing at a tremendous rate. The most recent quarter revenues were up 63% and earnings were up 65%. The Internet stocks have had a tremendous year, especially Internet retail as a whole. It’s one you could have a little piece of to participate in the very important structural theme, which is not slowing down at all.

It’s a good idea to be exposed 10% to the high flyers. You should use stops. You have to hang in if you are right too early. They beat earnings consistently and have a buy back in place right now. They have good strategy and a good management team in place. It has not broken technically.

Trading at around 27X Forward Earnings with a 27% long-term growth rate, giving it a 1X Peg Ratio. This is pretty cheap considering the Tech space they are in. It’s the world’s largest on-line and mobile commerce company measured by GMV growth merchandise volume. They have the largest Internet audience in the world with China of 738 million Internet users.

Like the rest of technology, there are indicators starting to turn down. Is the downturn going to crack the uptrend significantly? His guess is that it won’t.

The challenge is that it is a very, very expensive stock. Feels it has a smell in terms of the pricing. You can’t discount what they have done or the growth, but he just feels there is a correction needed in the price. If you own, you might want to start thinking about cutting it in half.

This is in an uptrend. It consolidated for a while, but generally speaking has been a fairly bullish pattern. The consolidation we are seeing, is still making higher highs and higher lows. A great stock. If it pulled back to a narrow trend channel, he would be all over this. Doesn't see anything stopping it.

It is an incredible company, an absolutely dominant business. However they manage in a way that does not look shareholder first. No one cares about the risks if the stock is going up. The government could suddenly exercise controls.

It is one of his core holdings. He trimmed a little because it was up so much but he likes it. This is going to be a huge company and could be the biggest in the world in a few years. This thing has tremendous momentum. The risk is political risk in China.

(Market Call Minute.) If you believe in online retail, you have to believe in this company. They control China. They have the opportunity to become the world’s biggest payment company. The risk is political.

This is a play on the underlying social media, logistics, delivery. In terms of the Chinese economy, it has a highly dense population, and if you want to deliver products, you just can’t go to the big box stores, so you get a delivery price which comes with the Ali Baba story. The valuation is very steep, and if it were a little lower he would potentially take a position. A very binary story as far as valuations go, but he recognizes it as a quality company.

World’s largest online mobile commerce company, measured by gross merchandise value. Given that they operate in China, is a big factor why he likes this. China has 560 million Internet users, spending 20 hours a week online, by far the largest internet market globally, double the size of the US market. They are well positioned to boost revenues related to particular content, entertainment and Cloud computing, which is about 5%-6% of their revenues. Cheaper than Amazon (AMZN-Q), trading at 31X earnings on a forward basis. Has a long-term growth rate of 25%, which is not an expensive measure when looking at a company like this. (Analysts’ price target is $200.)

(Market Call Minute.) The Amazon (AMZN-Q) of China, but growing at a much faster rate with many more people than the US. The 2 things he doesn’t like is the price and that you don’t get to vote on the shares.

Very different from Amazon (AMZN-Q). An e-commerce site, but they set up platforms for companies. Unlike Amazon, they don’t control the seller and they don’t compete with them. 90% of revenue comes from China. They also have a Cloud business that they want to grow and they have Alipay. They need to expand internationally, but can they compete on an international basis. Also, it is a very difficult thing for them to be in the Cloud business, because they are a Chinese company and people get very wary of the security. Thinks they will spin off the Alipay business. Feels Amazon has a much better business.

Ali Baba (BABA-N) or Amazon (AMZN-Q)? Both are online retailers. As a value investor, it is very difficult for her to own either. If she had to choose one, she would lean towards Amazon because they have their Cloud service business, which is very profitable. That sector is growing very fast and the penetration rate is quite low.