Alibaba Group Holding (BABA)

Had fabulous news this week in that projections going forward are over 40% revenue growth. It is way more than the Amazon of China. The Chinese are going to leapfrog over credit cards, and will be going right to paying with their phones. This company is perfectly positioned for this. This is not just China, they are all through Asia.

(A Top Pick Feb 2/17. Up 21%.) E-commerce in China makes sense, because there is such a big population. She still thinks there is a lot of upside.

Even though this has performed well, it is still the leading e-commerce leader, and more importantly they are figuring out more ways to diversify their revenues and just linked to e-commerce. Think of e-data helping companies target the segment that they want. The other really interesting thing is the Ali-Cloud. They initially started the Cloud computing business in 2009, because they needed a lot of capacity themselves. Now, it is the only Cloud provider in China that provides full inter-services. (Analysts’ price target is $140.)

The opportunity to be the Amazon of China is definitely there. They’ve got 500 million users now. They are kind of a quasi-Amazon eBay. The way you have to play this is, these are trading stocks, they don’t pay dividends, you don’t get voting control. Therefore, if you are going to trade them, do a half a position. If it doubles in price, then you take half off the table and then the rest is free. It’s a good company and they are in a good space, but he would still be cautious in investing in companies like this.

The Chinese Internet space is strong and this company is well positioned. It has opened up markets for a variety of businesses. He does not have a huge exposure to China. Tencent (TCEHY-5) (WeChat) is the only one he has and feels it is better than BABA-N.

A good company. It has had some struggles of late, but in general it is really good. It controls e-commerce in China. To the extent that they can roll out any real initiative to consumers in North America. It is a very good name.

If they can take out the $110 level and challenge the $120 all time high then they can do great things. They are the Chinese AMZN-Q.

His model price is $82.79, a 17% discount to current price. He plays this through Yahoo, however. BABA-N is expensive, relative to his model price, but Amazon is even more so. Yahoo is a cheaper way to play BABA-N.

Founded in 1999. Initially it was just a simple portal connecting manufacturer in China to buy items around the world. Currently about 80% of online retail goes to an Ali Baba website. She likes the whole move to online, because if you think about China and their big land base, they are very concentrated in major cities where there are a lot of bricks and mortar retailers. Then you have the rural and smaller villages, where there are none. Valuation is very compelling. Among the big 3 tech companies in China, this is the most inexpensive. (Analysts’ price target is $125.24.)

Had owned this, but got stopped out. It would be nice to see what sort of volume supports its latest move has had. Their competitive advantage or moat would be the network affect. There is some incredible power to the network affect, that as you add more retailers and users to your network, the value of that network gets greater and greater.

He likes this. Technically, it is above the 200-day moving average, which is positive. Fundamentally, it looks interesting. The most dominant Chinese e-commerce company, dominating about 75% of online sales. Recently upgraded the type of things they are selling online. Fundamentally it makes a lot of sense. Trading at a pretty decent valuation at about 30X valuation, but growing at a pretty high clip of 20%-25%.

A fabulous opportunity. Your risks are more political in China, but this company is just knocking the ball out of the park all the time. It has a great growth model to it. It is situated in an area that doesn’t have a lot of malls or a lot of shopping.

This is extremely well positioned. There are very few companies globally that dominate the way this does, in their space. It is expanding its footprint, and moving into other parts of Asia. He doesn’t own this, because he has a small question on corporate governance, which has him worried. They have done things in the past where benefits didn’t all accrue to the shareholders. He prefers Tencent (TCEHY-5), because they have not demonstrated anything that leads him to have questions on corporate governance.

This is doing remarkably well. What he likes is that you’ve got almost 500 million Chinese using the website. The one downside is that there is no voting control. He likes to have a vote for shares that he owns. Their growth rate is absolutely phenomenal. It’s a little weaker right now, which is just a reflection of what is happening in China and their markets. This is one you could speculate on. The multiple is very high, so take your time.

The Chinese are going to have to get to a point where other countries are, by having to trust their markets. The way to do that is through Hong Kong. Until that really becomes clear, people who cross the line get put in jail. This will be a work in progress. Perhaps a good proxy to look at is Amazon (AMZN-Q). The logistics of delivering products in China is very, very complicated. The density is very difficult. This company would save them going to the mall and putting up with traffic. Thinks there is a lot more upside. This is not going to be for the faint of heart.