3 High-Growth China Stocks American Investors Can Buy
Many investors today have deemed China stocks as non-viable investments. However, being a contrarian investor is a great way to make outsized returns. As you will soon find out, some of Wall Street’s mega investors are beginning to take a second look into the region. Guys like Michael Burry, Ray Dalio and even David Tepper have found value to be had in some of the nation’s biggest names.
However, not all Chinese stocks are made equal. Consider some of the smaller, yet indispensable, companies supporting the growth of the Chinese economy. By extension, these China stocks all bring high-growth opportunities already being backed.
Alibaba (BABA)
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Typically, the first one in line to collect investment dollars in this market is Alibaba (NYSE:BABA). Alibaba not only has blue-chip status, but also because is a major presence in the international e-commerce market. This area is not lacking in the high growth you need today.
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Compressed for the past twelve months, the stock is ranging between the $70 to $80 a share — fractions below its all-time high price of $319.30 in 2020. The Fed had lowered interest rates, tech stocks had become the norm and Alibaba rose to new heights.
Now that the Fed is looking to lower interest rates once again, history could repeat itself. Far from wishful thinking, analysts at Susquehanna have upped their price targets to $135 a share. This calls for an upside of up to 77.6% from where the stock trades today.
Daqo New Energy (DQ)
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Daqo New Energy (NYSE:DQ) is a bit of an obscure name, but a key pillar to the Chinese economy. Any country that wishes to adopt solar alternatives is, in one way or another, dependent on Daqo to transition into clean, renewable energy.
One of the world’s largest producers of polysilicon, this company is vital in making the raw materials necessary for solar panels. This commodity enables the photovoltaic process to transform UV rays into actual electricity. Therefore, this is a ‘shovel’ play amid a gold rush.
With a current price target of $38.60 a share, analysts are boldly shooting for a massive 108.6% upside from where the stock can be traded today. Of course, this is on the back of a projection for earnings per share to decline by 34.1% over the next twelve months. That does not at all reflect the potential growth to be had on the rapidly rising solar demand.
PDD Holdings (PDD)
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A direct competitor to Alibaba, PDD Holdings (NASDAQ:PDD) is getting a lot of exposure amongst American consumers. It has increased advertising on platforms like Instagram, YouTube and in the Super Bowl.
During its last earnings announcement, the company reported massive revenue and operating profits of 94% and 60%, respectively. If you are looking for high-growth exposure to China’s stock market comeback, PDD fits the profile.
Analysts see a conservative 25.9% EPS growth in the next twelve months, despite the extraordinary 47% growth the company reported previously. With this lower positioning, the likelihood of an increased earnings beat could propel this option in China stocks to new heights.
As of this writing, Gabriel Osorio-Mazzilli 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 (no position)
Gabriel Osorio is a former Goldman Sachs and Citigroup employee. He possesses discipline in bottom-up value investing and volatility-based long/short equities trading.
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