Further, the Chinese economy is poised to perform well in 2024, buoyed by an increase in mobility and activity following the lifting of pandemic restrictions. And, this rebound is anticipated to contribute significantly to global growth. In fact, the Chinese government targets a healthy GDP growth of nearly 5% for 2024.
Additionally, they are showing signs of easing regulatory pressures and fostering a more business-friendly environment. So, now could be an opportune time to consider investments in this vibrant market.
Thus, let’s explore three picks that are well-positioned to capitalize on China’s long-term growth trajectory.
JD.com (JD)
Despite facing a significant downturn, with shares trading around 73% below the all-time high, JD.com’s (NASDAQ:JD) operational success tells a story of resilience and underappreciated value. The e-commerce giant recorded over $4 billion in operating profit in 2023. This indicates remarkable growth of 53% year over year (YOY) from $2.6 billion in 2022.
Also, JD.com’s strengths lie in its robust logistics network and unparalleled delivery speed, maintaining a competitive edge in China’s fierce e-commerce battleground. The company’s commitment to expanding its reach through strategic investments positions it well for future growth.
Despite the market’s current pessimism, JD’s financial health and operational efficiency signal a significant potential upside. Currently, the stock trades at a forward price-to-earnings (P/E) ratio of 8.6 times. This is significantly below the company’s historic trading multiple. Also, it provides a compelling opportunity for investors to buy the stock at cheap levels.
Therefore, Wall Street analysts are optimistic about the company and have an average price target of $38.5 on the stock. This presents a significant 40% upside potential from current levels in the near-term.
Baidu (BIDU)
Baidu (NASDAQ:BIDU) is a dominant player in China’s technology landscape. The company is renowned for its search engine capabilities. However, Baidu has been making significant strides in the AI space lately. This sharpened focus towards AI positions the company as an appealing prospect for investors.
Moreover, the company’s pivot toward AI is indicative of Baidu’s ambition to lead in China’s burgeoning AI market. This is an area which is expected to witness exponential growth in the coming years. The launch and rapid adoption of its AI chatbot ERNIE showcase Baidu’s capabilities in delivering competitive AI solutions.
Finally, Baidu’s AI strategy, bolstered by its strong financial footing and market position, underscores substantial long-term gains potential. The company’s stock is trading at a forward P/E ratio of 9.5 times, presenting an appealing opportunity. The average price target on the stock is $161, leaving a potential 53% upside from current levels.
NetEase (NTES)
NetEase (NASDAQ:NTES) is a leading innovator in China’s competitive tech landscape. Founded in 1997, it’s grown from a software development company into a diversified internet technology giant. NTES engages in online gaming, music streaming, education, and e-commerce. Its gaming division develops and publishes hit games that resonate with a global audience. Further, it showcases NetEase’s prowess in creating engaging content.
Despite regulatory challenges in China, including strict gaming restrictions aimed at curbing addiction among minors, NetEase has navigated the regulatory environment, maintaining steady growth. And, strategic partnerships and new business expansion ensure the company’s relevance and sustainability in the ever-evolving digital domain.
Additionally, NetEase commits to innovation, coupled with a robust and diversified business model. It positions as a compelling investment opportunity, promising continued growth amidst the market’s volatility.
Hence, Wall Street analysts remain bullish on NetEase and have a price target of $136 on the stock. This provides a 32% upside potential in the near-term.
On the date of publication, Mohammed Saqib did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Mohammed Saqib is a research analyst with experience in equity research and financial modeling. He has extensively covered stocks listed in the tech sector using fundamental analysis as the cornerstone of his approach. Currently pursuing a master’s degree in finance, Saqib is dedicated to obtaining the CFA charter to augment his expertise in the field further.