These Chinese stocks could triple. When to Buy
Market Overview:
The market has now had a few days of institutional selling.
Caution is warranted.
Legal Disclaimer:
Legal Disclaimer: The Author is not a registered investment advisor. Investing involves risk. Financial information provided is believed to be accurate but we are not responsible for inaccuracies. I may own these securities for myself or in accounts that I manage. Past performance is no guarantee of future returns. Some links provided may be affiliate links and the author may receive a small commission.
China:
Chinese securities have unique risks. They have geopolitical risks (Invasion of Taiwan). Also, their accounting standards are not the same as ours.
Having said that, they offer a unique opportunity due to their four year bear market.
If you are more risk averse, buying the index, $ FXI makes sense.
But wait until there is a proper buy point. (See Below)
Purchasing long dated options (Leaps) makes sense as well.
Wait for a break above the 30 week average ~$25
Alibaba: $ BABA
I first started watching Alibaba after they announced they were spinning off numerous businesses to add value to shareholders.
Since then, they’ve delayed and changed their minds numerous times.
The shares are close to entering a new uptrend. (see below). But not there yet.
The shares are incredibly cheap and they’re taking actions to enhance returns with buybacks and dividends.
The company is an e-commerce conglomerate.
Valuation:
The shares are attractive based on valuation. They are in a strong financial position. Spin offs would make the story even better, but that may take some time to come to fruition.
$35B in stock buybacks.
Optimal Buy Point:
The stock breaks above the 30 week line (ideally on large volume). Then settles back to the 30 week line before continuing higher.
This chart and methodology are from Stan Weinstein’s excellent book, Secrets For Profiting in Bull and Bear Markets.
Highly recommend.