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BABA
Jan 12, 2022 20:13:03 GMT
Post by roi2020 on Jan 12, 2022 20:13:03 GMT
BABA has been surging lately. I bought too early and was about to throw in the towel. Now it's become my best performer. I own enough 0.6% in combined accounts (too much when it was cratering, but enough that I'm not about to buy more) It's above the M* BUY limit, but well below fair value of $188. Earnings are solid and growth rate reasonable. Next earning release is 2/1/2022. Real question is how much the Chinese Gov't can be trusted... maybe I'll buy more... That's the million dollar question!
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BABA
Jan 12, 2022 22:58:39 GMT
Post by jongaltiii on Jan 12, 2022 22:58:39 GMT
BABA has been surging lately. I bought too early and was about to throw in the towel. Now it's become my best performer. I own enough 0.6% in combined accounts (too much when it was cratering, but enough that I'm not about to buy more) It's above the M* BUY limit, but well below fair value of $188. Earnings are solid and growth rate reasonable. Next earning release is 2/1/2022. Real question is how much the Chinese Gov't can be trusted... maybe I'll buy more... That's the million dollar question! I’ve been watching BABA from the sidelines. Amused by the almost concurrent positive and negative Charlie Munger BABA articles. If I was a gambler, I’d wager that market volatility in stocks in that country will decline markedly the closer we get to and through the Olympics. Apres Olympics…it’s anyones guess.
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BABA
Jan 13, 2022 18:52:37 GMT
Post by bb2 on Jan 13, 2022 18:52:37 GMT
FWIW, (not much) Barron's today: www.barrons.com/articles/alibaba-stock-51642080547"Still, Alibaba stock look set to fall Thursday as China’s stock market fell due to concerns about its real-estate sector and the impact of further lockdowns on the world’s second-largest economy. Alibaba stock was off 3.2% at 10 a.m. in U.S. trading, which would be its largest decline since falling 3.4% on Dec. 31." "On the surface, Alibaba does look cheap. The Bear Traps Report notes that Alibaba’s market cap of $346 billion is just one-eighth of Apple’s (AAPL) $2.86 trillion market value after being worth about one-half of Apple over a five-year period. Alibaba still has a long way to go if it’s going reclaim those levels. China’s government will have a lot to say about that. And that’s one reason Keith Kerner, chief market strategist at Truist, claims that China’s internet stocks are still too expensive. “The trailing price-to-earnings ratio for this index remains high at 38x, and we expect further compression given the regulatory overhang and lessfocus on profitability,” he writes. Whether Alibaba is worth buying ultimately comes down to whether you believe the country will let the company thrive or a weight that keeps its shares from flying." Maybe let the China market as a whole settle? Past month not so great.
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Post by Fearchar on Jan 13, 2022 19:22:59 GMT
bb2, Yes; to a degree, it's about the Chinese Government. However, it's also about earnings. Year ending 3/2019 they earned $5.75/share Year ending 3/2020 they earned $7.63/share Year ending 3/2021 they earned $9.55/share as reported on 5/15/2021. That looked fabulous! 33% and then 25% growth in earnings/year!!! But then they started guiding lower; it's looking more like $8.22/share (7.32-8.88) for the year ending 3/2022. Next earnings announcement could be 2/1/22 so we will know more then. They also guided for 3/2022-3/2023 to about $9.21 (range 7.93-11.02). At current share prices, that works out to an earnings yield between 6.2-6.8%. So, with no real growth in earnings, they do have value.
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Deleted
Deleted Member
Posts: 0
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BABA
Jan 13, 2022 20:11:47 GMT
Post by Deleted on Jan 13, 2022 20:11:47 GMT
It was too much volatility and uncertainty for me. Happy to watch from the sidelines. Leaving it to a fund manager and etfs.
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BABA
Jan 13, 2022 21:39:00 GMT
Post by anitya on Jan 13, 2022 21:39:00 GMT
"[W]ith no real growth in earnings, they do have value." Not sure i follow. Do you mind elaborating?
To me, it appears a 15 P/E for a no growth in earnings company is more than a fair value, given the location where the company derives its earnings which dictates the risk free rate.
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BABA
Jan 14, 2022 0:20:47 GMT
Post by Fearchar on Jan 14, 2022 0:20:47 GMT
anitya , Baa corporate bonds are currently yielding about 3.51% Junk bonds are currently yielding about 4.67% Alibaba isn't about to default as they carry relatively little debt. So, even assuming no growth in earnings, the stock is trading with an earnings yield (~6%) which is way way above junk. That pretty well fits my definition of a valuable company even if it doesn't grow. Let's say in 2 years time, fear is forgotten and BABA has about the same earnings it has now, but is trading like junk (4.5%). Share price would have to appreciate over 35% for that to happen.
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BABA
Jan 14, 2022 8:29:40 GMT
Post by anitya on Jan 14, 2022 8:29:40 GMT
Sorry, I do not agree with your valuation methodology but it is too much effort for me to engage in that matter. Good luck.
P.S.: I own BABA. I do not treat it as a value stock, rather I treat it as a lottery ticket.
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