20.27 +0.33 (1.65%)
Pre-Market: 8:32AM EDT
|Bid||20.07 x 800|
|Ask||20.33 x 900|
|Day's Range||19.60 - 21.08|
|52 Week Range||13.71 - 25.96|
|Beta (3Y Monthly)||N/A|
|PE Ratio (TTM)||N/A|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||32.00|
When it comes to the stock market, U.S. President Donald Trump's Twitter (NYSE:TWTR) account may be the crystal ball which can help investors predict what's going to happen next.Back in early May, Trump fired off a tweet in which he said that China "broke" the trade deal, and that new tariffs would be coming soon. That tweet shook markets. Stocks fell. Over the next month, trade tensions between the U.S. and China heated up. Stocks kept falling. From Trump's tweet to the end of May, the S&P 500 shed more than 6%.Now, in late June, Trump has fired off another trade-related tweet. But this one has a far more positive tone. In this tweet, Trump said that he and China President Xi Jinping are going to have an "extended meeting" next week at the G-20 Summit in Japan. That tweet surprised markets, since most investors presumed the two nations were on such disagreeable terms that a meeting at G-20 wasn't going to happen. Now, it's going to happen. That's good news for markets. The S&P 500 responded by rallying more than 1% that same day.InvestorPlace - Stock Market News, Stock Advice & Trading TipsIn other words, a Trump tweet was the very thing which started a big meltdown in markets in May, because that tweet basically said trade talks are not going well. Now, a different Trump tweet could be the very thing which starts a melt-up in markets in late June, because this tweet basically says that a trade deal could be coming soon. * 7 Value Stocks to Buy for the Second Half With that in mind, let's take a look at six stocks that are ready to bounce in a big way in the event a trade deal does get struck between the U.S. and China sometime soon. Stocks to Buy for a Trade War Bounce: Alibaba (BABA)Source: Shutterstock If the U.S. and China strike a trade deal in the foreseeable future, one stock that will fly higher is Alibaba (NYSE:BABA).Being the juggernaut in the Chinese e-commerce landscape, Alibaba goes as the China economy goes. When China's economy is firing on all cylinders, so is Alibaba. Revenue growth is big, margins are healthy and BABA stock moves higher. On the flip side, when China's economy is slowing, Alibaba slows, too. Revenue growth decelerates, margins compress and BABA stock moves lower.China's economy was firing on all cylinders in 2017. That's why Alibaba stock went from $90 to $180. But, China's economy slowed in 2018. That's why BABA stock fell from $180 to $130. Shares rebounded to $190 in 2019 as China's economy picked up steam against the backdrop of improving trade relations. But trade relations deteriorated in May, and since then, BABA stock has dropped back to $160.It looks like trade relations are back on the "getting better" path. So long as they remain on that path, BABA stock will move higher. In the event that a trade deal is actually struck, this stock will soar to levels above $200. iRobot (IRBT)Source: Shutterstock One under-the-radar growth stock which is set to win big if the U.S. and China strike a trade deal is iRobot (NASDAQ:IRBT).iRobot manufactures and sells consumer household robotic products, with the present focus on robotic vacuums. This is a growth market. Low-level automation is the first step of the automation revolution, and iRobot is king in the low-level-automation world, creating machines which automate simple tasks that most people don't like to do (vacuuming, mowing the lawn, cleaning the pool, so on an so forth). As such, as the automation wave gains mainstream traction over the next several years, household robotic adoption will rise rapidly and iRobot's sales and profits will march higher. That growth will ultimately push IRBT stock higher, too.This secular growth narrative has hit a snag with the trade war. iRobot is a U.S. company. One of its biggest growth markets is China. As such, iRobot is at the epicenter of the U.S.-China trade war, and every tariff hike back and forth results in higher input prices for the company. In short, trade war tensions between the U.S. and China have put the secular iRobot growth narrative on hold. * 5 Stocks to Buy for $20 or Less If a deal is struck between these two countries, that holding period will end, and it will be replaced by resumption of the iRobot secular growth narrative. That resumption will put IRBT stock back on a winning path. Luckin Coffee (LK)Source: Shutterstock One growth-oriented way to play a trade war resolution is through buying shares of Luckin Coffee (NASDAQ:LK).Luckin Coffee is China's brand new, hyper-growth coffee shop chain, which is surging throughout China using a unique, small-store, digital-first model that resonates with China's millennial urban consumers. At scale, this company could one day turn into the Starbucks (NASDAQ:SBUX) of China. Starbucks has a $100 billion market cap. Luckin's market cap is at $5 billion. As such, the runway for long term growth in LK stock is quite promising.But, this is a China growth story, and if the China economy isn't doing well, the LK stock growth narrative won't be smooth. China's economy won't do well if trade tensions continue to escalate. But if a trade deal is struck, China's economy will get back to firing on all cylinders. If that happens, the Luckin stock growth narrative will fire on all cylinders, too.As such, a trade war resolution could be the exact catalyst LK stock needs to get started on a long-term winning path. Nike (NKE)Source: rodrigofranca via FlickrOne global apparel giant that stands to benefit tremendously from a trade deal is Nike (NYSE:NKE).Nike is the world's leading athletic apparel brand. As the world's leading athletic apparel brand, the company has a ton of exposure to China, trade and tariffs. Roughly 26% of Nike brand footwear and apparel is manufactured in China, and the Greater China geography accounted for 15% of Nike brand sales last year. As such, Nike has broad exposure to both U.S.-China tariffs and a trade-related China economic slowdown.Remove these issues, though, and Nike looks really good right now. The company is simultaneously benefiting from a secular rise in global athletic apparel adoption and growing share in that market using rapid product innovation and a shift to a direct-sales model. * 7 Top-Rated Biotech Stocks to Invest In Today Broadly, then, if trade war risks disappear, NKE stock should fly higher. The rest of this growth narrative is on fire right now. Remove the one headwind, and that creates runway for big gains in Nike stock. Foot Locker (FL)Source: Shutterstock Along the same lines as Nike, another athletic apparel stock that should run higher if a trade deal is struck is Foot Locker (NYSE:FL).Things look good at Foot Locker right now. After spending a few quarters below zero, comparable-sales growth is back in positive territory again, and comps were up nearly 5% last quarter. Physical stores are comping positive. Digital sales are growing at a double-digit pace. Gross margins are expanding. Profits are up.Net net, the numbers at Foot Locker are pretty good, supported by a secular rise in athletic apparel adoption and stabilization in the physical and wholesale retail markets. The only problem here is the trade war. Unfortunately, it's a big problem. Owing to the athletic footwear market's broad exposure to imports from China, Foot Locker presently finds itself at the epicenter of the trade war. The higher tariffs go, the worse things will get for Foot Locker.But, if those tariffs go away entirely, things will get way better for Foot Locker. FL stock is cheap enough right now (8 times forward earnings) that if things do get better, the stock will bounce in a big way. Intel (INTC)Source: Shutterstock One sector that has been killed by the U.S.-China trade war is the semiconductor market, and one stock in that market that could win big in the event of a trade war resolution is Intel (NASDAQ:INTC).The semiconductor space has a lot of U.S.-Asia trade exposure, with big customers and manufacturers on both sides of the Pacific Ocean. Thus, as trade tensions between the U.S. and China escalated, global semiconductor demand weakened and production costs became an issue. Consequently, semiconductor stocks dropped.Intel was one of those stocks. As one of the world's largest semiconductor companies, Intel has huge exposure to China. But a trade resolution between the U.S. and China should re-stoke demand and ease rising cost pressures. If that happens, Intel's revenue and margin growth trajectories will meaningfully improve. * 10 Stocks to Buy That Wall Street Expects to Soar for the Rest of 2019 Much like FL stock, INTC stock is cheap enough today (10x forward earnings) that any positive news on the trade front should put significant upward pressure on shares.As of this writing, Luke Lango was long BABA, IRBT, LK, NKE, FL, and INTC. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Value Stocks to Buy for the Second Half * 7 Hot Stocks to Buy for a Seemingly Sleepy Summer * 6 Chip Stocks Staring At Big Headwinds in 2019 Compare Brokers The post 6 Stocks Ready to Bounce on a Trade Deal appeared first on InvestorPlace.
BEIJING, China, June 19, 2019 -- Luckin Coffee Inc. (“Luckin Coffee” or “the Company”) (NASDAQ: LK), a technology-driven new retail provider of coffee and other products, today.
The major competitor to Starbucks in China, Luckin Coffee, has been moving up and up, but one analyst doesn’t think Starbucks shareholders have much to worry about from the rise of the Chinese coffee chain that went public in the U.S. in May.
This 18-month old, homegrown brand, which is on track to open more stores in China than Starbucks, believes it can beat the Seattle-based coffee pioneer through the simple — if costly — strategy of persuading customers to drink coffee by paying them to do so. Most urban Chinese are not drinking much more coffee than they were two years ago, an FT Confidential Research survey shows, with only those living in first-tier cities — China’s richest consumers — increasing their intake markedly. Just 29 per cent of respondents from third-tier cities said they drank coffee once a week, down from 31 per cent two years ago (we did not survey in rural areas, where the frequency would be much lower).
A good rule of thumb in the stock market is to not buy stocks just because they are cheap or low. Cheap stocks, or stocks that trade at discounted valuation multiples, are often cheap for a reason. The same is true for low-price stocks, or stocks that trade in the under-$10 and under-$20 ranges.As such, when dealing with super cheap stocks or super low-price stocks, investors should exercise caution. These stocks are at these levels for a reason, and it's not usually a good reason.Having said that, this group of beaten up stocks does offer significant upside potential. These stocks are priced for death. Thus, if anything good happens, these stocks will rise by a lot, and quickly. But you need something good to happen first, and something good only materializes for a handful of these sub-$10 and sub-$20 stocks.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Top-Rated Biotech Stocks to Invest In Today With that in mind, I've put together a list of high quality stocks in the under $20 bucket which are supported by healthy fundamentals, and have a realistic opportunity to rally in a big way from their current prices. Which stocks made the list? Let's take a deeper look. Luckin Cofffe (LK)Source: Shutterstock Stock Price: $18The first stock on this list is freshly public Luckin Coffee (NYSE:LK), the hyper-growth China retail coffee chain which many dub the Starbucks (NASDAQ:SBUX) of China.The core growth narrative here is very favorable. Luckin is the fastest growing and second largest retail coffee operator in China, and is on track to soon become the largest player in the space. At the same time, the China economy is rapidly urbanizing and expanding, and the coffee market in that economy is surging higher, rising by over 30% last year. That makes Luckin the hyper-growth leader in a rapidly expanding market, a combination which ultimately implies tremendous long-term growth potential.The numbers underlying LK stock are equally favorable. Luckin Coffee has a market cap of about $4 billion. Starbucks has a $100 billion market cap. To be sure, Luckin Coffee will never be as big as Starbucks. But, if the company does become a leader in what projects to be a $25 billion-plus China retail coffee market, then today's $4 billion market cap looks like a steal.Starbucks has about 40% market share in the U.S. Luckin can maybe do 20% share in China. A 20% share in a $25 billion market implies $5 billion revenue potential. On 10% operating margins and after a 20% tax rate, that equates to $400 million in net profits. A market average 16 multiple on that implies a potential future valuation target of over $6 billion. That's way bigger than $4 billion. Aurora Cannabis (ACB)Source: Aurora Cannabis Stock Price: $7.50In the under $10 category, one of the more attractive stocks to buy is undervalued Canadian cannabis producer Aurora (NYSE:ACB).No matter which way you slice it, Aurora is one of the more undervalued pot stocks in the market. It's cheaper than most peers on a trailing sales basis, forward sales basis, volume basis, and on pretty much every other important operating metric. That relative cheapness in ACB stock comes despite Aurora having many strengths. Aurora is the second largest player in the Canadian cannabis market behind Canopy Growth (NYSE:CGC), is one of the fastest growers in the market, is behind some of the top selling products across Canada and has one of the largest production capacities.Why, then, is ACB stock cheap relative to peers? Balance sheet. Cronos (NASDAQ:CRON) and Canopy are loaded up with billion dollar investments from consumer staples giants, which simultaneously shore up their balance sheets and give those companies ample firepower to grow rapidly. * The 7 Best Tech Stocks to Buy for the Second Half of 2019 Aurora has no such investment. But if the stock stays this cheap for long, it's only a matter of time before they get a big investment. Also, the company is tapping into the debt markets to raise sufficient capital to compete, meaning that in the big picture, this valuation disconnect has no reason to exist. If it gets wiped out -- as it should -- ACB stock could fly higher. Vipshop (VIPS)Source: Shutterstock Stock Price: $7.75Another hidden gem in the under $10 category is Chinese e-retailer Vipshop (NASDAQ:VIPS).Although China's economy is slowing, it is still growing at a robust mid single digit rate. At the same time, the digital economy remains red hot, with e-retail sales projected to rise 30% this year. Vipshop is at the heart of this robust e-retail sales growth narrative. Further, Vipshop is a discount retailer, and if the U.S. retail landscape has shown us anything, it is that off-price retail is a winning strategy. See the stocks of Ross Stores (NASDAQ:ROST), TJX (NYSE:TJX), Walmart (NYSE:WMT) and Five Below (NASDAQ:FIVE), versus the stocks of Nordstorm (NYSE:JWN) and Macy's (NYSE:M).Thus, Vipshop finds itself at the convergence of two favorable trends. On one end, you have robust growth through expansion of China's e-commerce landscape. On the other end, you have sustained popularity through an off-price retailing strategy.Net net, that means Vipshop projects as a sustained big grower for the foreseeable future. That sustained big growth should shoot VIPS stock materially higher from today's sub-$10 price. American Eagle Outfitters (AEO)Source: Mike Mozart via Flickr (Modified)Stock Price: $17A bunch of mall retailers trade in the under $20 range. But, only one retail stock is really worth buying at these levels and that stock is American Eagle Outfitters (NYSE:AEO).Put simply, American Eagle is a winning retailer. They are succeeding where others are not. American Eagle has transformed into the king of the denim category, and denim has made a strong comeback over the past several years. At the same time, American Eagle's Aerie brand has been one of the hottest stories in retail because the brand has aligned itself with body positivity tailwinds. Because of these favorable dynamics, American Eagle demand has remained resilient in the face of broader mall retail demand turbulence, which has allowed American Eagle to report far better than peer numbers over the past several quarters.The numbers speak for themselves here. American Eagle has rattled off 17 consecutive quarters of comparable sales growth, and 6 consecutive quarters of 5%plus comparable sales growth, including a 6% comp last quarter. In the overlapping period, peer mall retailers Nordstorm, J.C. Penney (NYSE:JCP), Gap (NYSE:GPS), Express (NYSE:EXPR) and many others pretty much all reported negative comps. The norm was also big gross margin compression. American Eagle's gross margins only fell back 30 basis points. * 5 Red-Hot IPO Stocks to Buy for the Long Run Broadly, American Eagle Outfitters is significantly outperforming its retail peers. This is nothing new. This has been the trend for a long time. It also projects to remain the trend for the foreseeable future. Consequently, if you're gonna buy a mall retail stock in the under $20 category, AEO should be your first choice. Ford (F)Source: Jens Mayer via Flickr (Modified)Stock Price: $10The last stock on this list is another stock in the sub-$10 category which has compelling upside in a medium to long term window.We all know Ford (NYSE:F), the U.S. automotive giant that makes great pick-up trucks and a variety of other good cars. Naturally, that sounds like a stable business, since auto demand is fairly stable, and Ford has been a relevant player in that space for what seems like forever. But the narrative supporting Ford stock has weakened over the past several years, mostly because the auto space is shrinking thanks to ride-sharing, and because Ford is losing share thanks to the emergence of electric vehicles.These headwinds are very real. But they are also overstated. Sure, some urban residents will chose to forego car ownership as a result of increased ride-sharing prevalence. But most won't, because no matter how good ride-sharing gets, it won't ever parallel the convenience of car ownership. Further, electric vehicles are ramping. But, Ford isn't just sitting on its hands while consumption pivots. They are pivoting into the EV space, too, and the company should be able to command respectable EV share at scale.Overall, then, the fears dominating the Ford narrative at present are overstated. Ultimately, they will pass, and when they do, Ford stock will rally from today's depressed levels.As of this writing, Luke Lango was long LK, ACB, CGC, TJX, WMT, FIVE, and JWN. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * The 7 Best Tech Stocks to Buy for the Second Half of 2019 * 7 Top-Rated Biotech Stocks to Invest In Today * 4 Semiconductor Stocks to Sell Compare Brokers The post 5 Stocks to Buy for $20 or Less appeared first on InvestorPlace.
The sovereign-wealth funds of Qatar and Singapore disclosed large stakes in the Chinese coffee chain. A unit of Capital Group also bought up Luckin stock.
Investors looking for a good Chinese growth stock should buy Luckin Coffee (NASDAQ:LK).Source: Shutterstock And anyone who has bought the shares of Chinese electric-vehicle maker Nio (NYSE:NIO) should dump their Nio stock and buy Luckin Coffee stock instead. Luckin Coffee Stock Is Everything That Nio Stock Is NotLuckin Coffee stock has all the characteristics of an excellent growth stock. Luckin is growing rapidly, has created a product that millions of people love, isn't facing tough competition, can easily grow a lot more and can quickly become profitable.InvestorPlace - Stock Market News, Stock Advice & Trading TipsLuckin's revenue jumped from $12.9 million in the first quarter of 2018 to $478.5 million in Q1 of 2019. Clearly, its products are resonating with millions of people in China. According to KeyBanc, the company "provides quality coffee at almost half the prices seen on the menus of Starbucks Corporation (NASDAQ:SBUX) and the British brand Costa Coffee." * 7 Stocks to Buy for the Coming Recession Another research firm, Needham, believes Luckin has a huge growth opportunity. The firm wrote that Luckin is "disrupting the coffee industry in China … and gaining market share in China's coffee market which is characterized by rapid growth," Investor's Business Daily reported. Needham started Luckin Coffee stock with a "buy" rating, while KeyBanc initiated it with an "overweight" rating. Importantly, Luckin Coffee looks well-positioned to become profitable, especially given its rapid top-line growth. In 2018, the company generated a gross profit of $308.5 million. Although its high total operating expenses of $2.4 billion prevented it from being in the black overall, the impact of the operating expenses -- many of which are fixed costs like paying executives and conducting R&D -- on its bottom line will decrease as revenue grows.Conversely, as InvestorPlace columnist Vince Martin pointed out in a piece published earlier this month, Nio is facing very tough competition, and its deliveries plunged nearly 50% in the first quarter versus the previous quarter. NIO itself has warned that its competition is becoming more formidable, even though, as Martin noted, its "market share is miniscule."Indeed, the company is competing against at least eight other electric-vehicle makers, including BYD (OTC:BYDDF), which obtained an investment from Warren Buffett, and BAIC, which is owned by the government of China. Additionally, foreign automakers, including Tesla (NASDAQ:TSLA), GM (NYSE:GM), Volkswagen (OTC:VLKAF), and Ford (NYSE:F), are preparing to sell electric vehicles in the Chinese market.In three of the last four quarterly results reported by Nio, the company's gross profit has been meaningfully negative, so it's nowhere near being profitable. Given that stat, along with Nio's tough competition and the fact that its revenue dropped meaningfully last quarter, I agree with Martin's warning that Nio stock price could easily hit zero. Luckin Stock Is a Much Better Buy Than NIO StockDespite the tremendous disparity between the companies' performance and outlook, Luckin Coffee stock is not that much more expensive than Nio stock. Luckin looks much more expensive on the surface because its price is over $18 per share and Nio stock price is barely above $2 per share. But Luckin Coffee stock has a market cap of $4.14 billion, while the market cap of Nio stock is $2.75 billion. The enterprise value-sales ratio of Luckin Coffee stock is a bit over three, while that of Nio stock is a bit under two. In other words, even though Luckin's business is so much better positioned than that of Nio's, Nio stock isn't much cheaper than Luckin Coffee stock. The Bottom Line on Luckin Coffee Stock and Nio StockLuckin's business is booming and the company faces very little competition -- it will soon be profitable.Nio's business is weakening, it faces intense competition, and it isn't going to be profitable anytime soon. * 7 High-Quality Cheap Stocks to Buy With $10 Luckin's outlook is very strong, while NIO has a good chance of going belly-up. And, yet, Luckin Coffee stock isn't that much more expensive than Nio stock. Clearly, investors looking for a Chinese growth name should dump Nio stock and buy Luckin Coffee stock.As of this writing, Larry Ramer did not own any of the aforementioned securities. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Stocks to Buy for the Coming Recession * 10 Smart Dividend Stocks for the Rest of the Year * 5 Tech Stocks That Are Far Too Risky Right Now Compare Brokers The post Sell Nio Stock, Buy Luckin Coffee Stock appeared first on InvestorPlace.
Shares of China’s Luckin Coffee could jump significantly over the next 12 months, according to 3 analysts who initiated coverage for the stock on Tuesday.
Luckin Coffee got bullish coverage, as analysts said the new IPO and so-called Starbucks of China should see "lots of growth." Luckin Coffee stock was down.
Luckin Coffee Inc – ADR (NASDAQ: LK ) has a number of strategic advantages, including exposure to China’s rapidly evolving coffee culture, limited competition, low costs and better analytics than peers, ...
Analysts who have weighed in so far like Luckin’s strategic store positioning, competitive coffee pricing compared to rival Starbucks Corp and expansion potential in the Chinese market. Shares of the Xiamen, China-based Luckin rose 8.5% from the May 16 initial public offering through Monday close, after dipping below the $17 offering price last month.
Alibaba's (NYSE: BABA) food delivery platform, Ele.me, has shown rapid growth in the past few quarters. The recent quarterly report of its rival Meituan indicates signs of lower price wars with Ele.me. Meituan's quarterly loss in the recent quarter was $207 million, less than half the consensus estimate by analysts, while the growth rate was 70%. Ele.me and Meituan have formed a duopoly in food delivery and other consumer services in China. Source: Shutterstock InvestorPlace - Stock Market News, Stock Advice & Trading TipsAfter the initial heavy discounting strategy, both these companies are looking to reduce their losses. This should be a significant tailwind for long term margins and Alibaba stock.Ele.me had a revenue share of 5% in the latest quarterly results of Alibaba with revenue of $785 million. This share can increase to 10%-15% by the next fiscal year due to faster growth in this segment. Improvement in margins in Ele.me should increase the overall revenue growth of Alibaba. This will increase its EBITDA significantly. Investors should closely look at the future growth potential of this service. Duopoly Shows Lower CompetitionFood delivery is another segment where Alibaba and Tencent are competing. Meituan is backed by Tencent and was listed in late 2018. After the listing, Meituan saw significant stock decline, however, it has made some recovery in the last few weeks. One of the reasons for more positive sentiment towards Meituan is the lower discounts offered by the company to gain market share. * 7 Dark Horse Stocks Winning the Race in 2019 In the initial growth phase, both Meituan and Ele.me relied on heavy discounting to attract restaurants and customers to their services. Both these competitors are now moving away from discounts. Massive discount led to big losses in Ele.me and also hurt Alibaba stock.but an easing of that headwind has reduced the losses in Meituan. A similar trend should be shown by Ele.me in the next few quarters. Alibaba has integrated Ele.me with Koubei to form a separate segment called "Local Consumer Services."Fig: Ele.me revenues are shown within local consumer services division. Source: Alibaba FilingsThe market share of Meituan is still higher than Ele.me. Meituan's market share is 63.4% according to Trustdata. Ele.me, meanwhile, has integrated its services within Alibaba's Taobao and Tmall apps. In the recent quarterly report, Alibaba mentioned that 30% of the customers on Ele.me come through these apps. This is a big positive, and better integration of Ele.me with other apps within Alibaba's ecosystem will improve the moat of these services. Future Direction for BABA StockThe delivery market is far from saturation in China. We should continue to see more services added to the delivery platforms, increasing the growth potential of Ele.me and also helping build a better last-mile logistics network. Ele.me is in discussion to add Luckin Coffee (NASDAQ:LK) to its delivery network. Luckin is the main rival of Starbucks in China and was valued at $4 billion in the recent IPO.Alibaba is rapidly building its grocery store format called Fresh Hippo. Recently it opened its 150th store and has plans to ramp up the store openings in many cities. The delivery network of Ele.me would be a big boost to this grocery business. It should be noted that Ele.me's delivery network is much more closely integrated with Alibaba's ecosystem compared to Meituan's integration. Hence, Alibaba has a number of options to monetize every additional member on Ele.me.Alibaba has also been replicating Ele.me's model in other international regions. One of the faster-growing regions for delivery services is India where Alibaba has invested in Zomato, a leading player. Last year, Ant Financial invested over $400 million in the company. In the recent annual report, Zomato mentioned a 3x jump in revenue. Zomato is competing against Swiggy in this region, which is backed by Tencent (OTCMKTS:TCEHY).Source: ZomatoWe should see a similar trend in delivery services in other regions of South Asia and Southeast Asia. This opens a greater opportunity for Alibaba. A healthy margin by Ele.me in China should help in improving the future expectations from these services in other international regions. This should lead to better sentiment towards Alibaba stock as the company expands its international business. Path to IPOTencent has been quite eager to go to the IPO route for its different services. In 2018, we saw IPO of Meituan and Tencent Music, and we could see more. Alibaba has not taken this path till now. But it is likely that Alibaba will also try out this approach, as it will be able to invest in other growth segments. Meituan has a valuation of $40 billion while Tencent Music has a valuation of over $20 billion. Alibaba can take IPO option for Ele.me and Youku (its digital media segment) to get a better standalone valuation for these businesses. Reuters has reported that Alibaba is looking for a secondary listing of $20 billion in Hong Kong. This option should also help in getting a better valuation for Alibaba stock. Currently, Tencent, which is listed in Hong Kong, is valued at 24 times its forward earnings. Alibaba is trading at around the same level, but Alibaba's revenue growth has exceeded Tencent for the past six quarters. In the recent quarter, Tencent reported revenue growth of only 16% compared to 39% by Alibaba after adjusting for acquired businesses. Investor TakeawayAlibaba's food delivery platform, Ele.me, is seeing lower price competition. The discount wars between Meituan and Ele.me have reduced considerably. This has helped Meituan post better results in the latest quarter, so Ele.me should also see an improvement in margins. The recent revenue from this platform was $765 million with a 5% revenue share. That revenue share metrics should increase substantially as new services are added to the delivery network. Better margins and higher revenue share from Ele.me should lift the overall margins for the company and increase the bullishness towards Alibaba stock.Alibaba is also replicating this model in other regions. This will help the company in diversifying its revenue base and also improving the growth prospects in international regions. Alibaba can use the IPO route for Ele.me which should improve the valuation for this business and allow the company to divert resources to other profitable segments like cloud.As of this writing, Rohit Chhatwal did not hold a position in any of the aforementioned securities. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Dark Horse Stocks Winning the Race in 2019 * 6 Chinese Stocks to Sell That Are Suffering From a Digital Ad Slowdown * 4 Technology Stocks Blasting Higher Compare Brokers The post Alibaba's Delivery Platform Provides a Big Opportunity appeared first on InvestorPlace.
Starbucks stock surged to an all-time high for a third straight session, amid sinking coffee prices and optimism from the firm over its China expansion.
Melvin Capital Management and Darsana Capital disclosed that they each own millions of American depositary shares of the “Starbucks of China.”
Competition in the Chinese coffee market will challenge Starbucks, but the Seattle giant can still rely on that market to help drive growth because of its differentiated model, according to new research.
Shares of Xiamen, China-based Luckin Coffee soared as much as 53% to $25.96 on May 17, their first day of trading in the U.S. Since then, the stock has plunged 39% from that peak, even with a rally in the final half hour of trading Thursday that gave Luckin a 7.1% gain for the day. Luckin’s 7.1% decline from its offering price of $17 per share -- to $15.79 as of Thursday’s close -- isn’t as bad as the performance from ride-hailing company Lyft Inc., which is down 20% from its offering price of $72 in late March.
Luckin’s IPO turned some heads and raised some questions, but there’s no doubt the Chinese market potential for coffee is enormous.
Investor Updates: The Latest Buzz from Alibaba(Continued from Prior Part)Alibaba seeking coffee delivery business from LuckinAlibaba (BABA) is in talks for a contract to deliver coffee products for Luckin Coffee (LK) customers in China, according to
Shares of Luckin Coffee fell Wednesday morning, joining the likes of Uber and Lyft by dropping below its initial public offering price days after its debut.
Luckin Coffee (NASDAQ:LK) was down 6.7% in midday trade Wednesday, falling below its initial public offering price less than a week after it debuted.
2019 has arguably been the best year for IPO stocks in two decades. Sure, other years have had one or two big offerings that have captivated the market. But 2019 is shaping up well for both the breadth of the IPO stock pool and the star power of some sizzling headlining names.Not only do we have the seven IPO stocks discussed below, there are more on the way such as Slack and AirBnb. After years of many of the country's fastest growth companies remaining stuck in venture-capital hands, we public investors are getting our shot at a ton of exciting growth companies. * 7 Stocks to Buy for Over 20% Upside Potential But discretion is required. Not all new IPOs are bound for greatness. In fact, with the IPO stock window wide open, banks are using this opportunity to push out all sorts of new offerings to the public. Some of these will work out well, and others will be flops. Here's what you need to know about seven of the year's biggest IPO stocks so far.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Hot IPO Stocks: Uber (UBER)Source: Shutterstock Morgan Stanley's Michael Grimes is developing a spotty reputation. The bank's leading IPO dealmaker was responsible for both the Facebook (NASDAQ:FB) and Uber (NYSE:UBER) IPOs. FB stock dropped more than 50% in the months after its IPO. Meanwhile, the Uber IPO came in far short of expectations and has traded fairly poorly, even after the downbeat IPO price.However, if we learned anything from Facebook stock, it's that a flop IPO isn't a death sentence for a public company. After its terrible trading debut, Facebook turned the corner. Mobile advertising started to take off and shares now trade for around 4x their IPO price. Will Uber be able to make a similar turnaround?Uber's financials are certainly troubling. The company isn't a huge profit generator like Facebook, at least not yet. But it's the leader in ride sharing both in the U.S. and dozens of overseas markets. On top of that, Uber has advanced aggressively into other adjacent markets, like food delivery.Uber is a high-risk, high-reward play, for sure. There's a chance that the company will never become profitable and go bust. But it's the clear dominant market leader, and the market should reward them for that.Don't invest funds that you can't afford to lose, but if you have a high risk tolerance, UBER stock is a buy here. Lyft (LYFT)Source: Shutterstock To be fair, Lyft (NASDAQ:LYFT) stock hasn't been one of the hot IPO stocks over the past weeks. In fact, it has taken quite a tumble since it IPOed at $72 and subsequently started trading at $87. As always, however, price matters. Lyft stock is a far more interesting investment candidate here at $55 than it was when the stock debuted.There are good reasons to be bearish on LYFT stock. Our Dana Blankenhorn offered a solid take. He warned about the company's share lock-up expiry in September, its issues with self-driving vehicles and its potential for running out of cash before it becomes profitable. These are all valid concerns. Their first quarterly earnings report did nothing to impress those who are doubting Lyft's business model either. * 7 High-Yield REITs to Buy (Even When the Market Tanks) But I think it's too early to throw in the towel on Lyft as an investment idea. Ride-sharing is already a big market, and it's only going to get bigger in coming years. In the U.S., Uber and Lyft dominate the market with little additional competition. As such, this offers an opportunity for both firms, gradually, to raise prices and reach profitability or at least slow down cash burn.It's possible that LYFT stock collapses, particularly if the stock market as a whole goes south. But for now, the company's rapid growth should be enough to keep traders interested in the stock at its significantly reduced valuation. I rate LYFT stock a hold. Beyond Meat (BYND)Source: Shutterstock Beyond Meat (NASDAQ:BYND) has taken the stock market by storm, offering the hottest-trading IPO of the year so far. BYND stock, which IPOed at a measly $25 per share, has now soared to as high as $97 and even after a big drop today is still holding around the $82 mark now.First things first, Beyond Meat has a great story. The company offers what many are saying is the most compelling meatless burger option to date. Competitors have been trying to launch a plant burger since the 1980s, but it has been hard to get the texture and taste right. Apparently Beyond Meat has gotten closer than most. As a result of its success, Beyond Meat is picking up distribution rapidly in grocery stores and restaurants. Almost every week, we've been hearing about a new restaurant partnership.Unfortunately, the market has taken this great story and blown it totally out of proportion. BYND stock is now selling at 60x its annual revenues. Yes, Beyond Meat is doubling its revenues every year for the time being. But even at that growth rate, it'd still be selling for 15x sales in 2021. That's ridiculous for a food company. I'd be hard-pressed to justify more than 7x sales for a food producer once the growth rate starts to slow down.BYND stock made a lot of sense at its IPO price. Up here, however, it's simply priced too high to succeed. Other companies aren't going to acquire Beyond because it'd be too dilutive at this price-to-sales ratio. Meanwhile, Impossible Foods, funded by the likes of Bill Gates, is ramping up their competition to Beyond in the plant-based protein space.Once the hype wears off and the trading float frees up, BYND stock will drop sharply. That's not a judgment on the company. The valuation is simply too high for Beyond Meat's extremely limited sales and large losses at the moment. Needless to say, I rate BYND stock a sell. Pinterest (PINS)Source: Shutterstock Sometimes Wall Street can miss stocks if most analysts are outside of a company's core market. An example of this was Etsy (NASDAQ:ETSY). The stock started trading in 2015 around $28 per share. It traded down to below $10 at one point, and skeptics were giddily writing the company's obituary. The tables turned, however, as Etsy was able to prove its business model worked, and the stock has shot up more than 500% in recent years.There's no guarantee that Pinterest (NYSE:PINS) can be another success like Etsy, but I see the same opportunity for a misunderstood business model. Sure, Pinterest may not have the same wide user base as other social networks/shopping sites. What it does have is a core passionate user base. And at 80 million monthly active users in the U.S., there's certainly enough of a business here to achieve profitability if revenue per user can ramp up. * 6 Chinese Stocks That Could Pop On a Trade Deal Interestingly, the current valuation for PINS stock is just $15 billion or so. The company last raised money on the private market in 2017 at a valuation of around $12 billion. That means the company's growth since then -- including 60% revenue growth last year -- is coming at a reasonably cheap price for new shareholders.Sure, the company's first earnings report was a big dud and killed the stock's momentum. But that gives folks a chance to buy again at a decent price. Pinterest will need a better earnings report next time to get investors excited again. There's certainly a decent investment case though, regardless. I rate PINS stock a hold. Hot IPO Stocks: Luckin Coffee (LK)Source: Shutterstock Luckin Coffee (NASDAQ:LK) just launched its IPO last Friday. The IPO priced at $17 and traded to as high as $25 on its opening day. The caffeine high has quickly worn off, however, as LK stock is already back down below $19. Unfortunately for its shareholders, I see LK stock dropping a lot lower over the next year.On the surface, Luckin seems like an exciting opportunity. The company is aiming to be the Starbucks (NASDAQ:SBUX) of China. It has already expanded from a handful of stores at the end of 2017 to more than two thousand stores today. According to its IPO documents, it intends to overtake Starbucks in total store count by the end of this year. That's some pretty amazing growth.Unfortunately, Luckin's business model doesn't appear to be nearly as robust as Starbucks'. Last quarter, for example, the company had an operating loss of $78 million on just $71 million of sales. That's an incredible rate of money burning. Just cost of goods sold and rent for the store locations alone cost more than all the cash Luckin took in, and that's before you get to SG&A, marketing and other essential costs.Luckin needs far more sales from each store. Just setting up hundreds more stores will do little to fix the company's gaping losses when each store is losing so much money as it is. To make matters worse, Luckin's sales trajectory has slowed dramatically. I rate LK stock a sell. It has a ton to prove or shareholders will be dumping Luckin in a hurry. Tufin Software (TUFN)Source: Shutterstock Tufin Software (NYSE:TUFN) isn't the most popular of the IPOs on this list, but it could just end up delivering the best results for shareholders over the years. Tufin Software is a security services play. Two ex-employees from highly successful security firm Check Point (NASDAQ:CHKP) founded Tufin almost 15 years ago and have built it into an emerging power.Even though TUFN stock has already traded up from $18 to $22 following the IPO, it still represents solid value here. Its current share price represents a market cap of $730 million. That amounts to about 9x sales for a company that is growing revenues annually around 20%. Revenues have grown from $65 million to $85 million last year, and are on target to exceed $100 million this fiscal year. * 7 Stocks to Buy that Lost 10% Last Week Impressively, Tufin is already right on the verge of profitability. It has been generating EPS generally within a few cents of breakeven in recent quarters and has even come up with a couple of quarterly profits. Unlike many recent IPOs, TUFN stock priced at a reasonable valuation, leaving some gains on the table for its new retail shareholders. I rate TUFN stock a buy and wouldn't be surprised if it trades up to $30 over the next year. Zoom Video (ZM)Zoom Video (NASDAQ:ZM) has lived up to its name. ZM stock has zoomed from an opening day price of $62 to as high as $91. It's even more impressive when you realize that the stock IPOed at just $36. Zoom even managed to hit a new high on Monday before reversing as the stock market turned downward on China worries. I'd wait for a much bigger decline before considering a purchase of ZM stock, however.The main obstacle here is price. The company is selling at an incredible 65x sales at the moment. Generally, it's wise to avoid companies trading above 10x sales. Certainly, if a company is going for more than 20x sales, it has to have a stratospheric growth rate to justify it.Zoom doubled revenues last year, but it already appears to be slowing down a bit. It gets exponentially harder to maintain blistering sales growth as your base of revenues expands. By 2021, it wouldn't be surprising if Zoom's revenue growth rate is down to 50% annually. That'd still be great if the stock's valuation were more reasonable. But investors are paying more than $20 billion today for a company that has just $330 million in annual sales. That's an insane price. I rate ZM stock a sell and see it dropping back toward its opening print around $60.At the time of this writing, Ian Bezek owned FB stock. You can reach him on Twitter at @irbezek. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Stocks to Buy for Over 20% Upside Potential * 5 Large-Cap Stocks Holding Steady Amid Trade War Concerns * 7 ETFs for Healthy Healthcare REITs Compare Brokers The post Should You Buy, Sell, Or Hold These 7 Hot IPO Stocks? appeared first on InvestorPlace.
Joining Yahoo Finance's Jen Rogers and Myles Udland is Brian Shannon, CMT and founder of www.alphatrends.net. It's been exactly four weeks since Luckin's IPO and the charts are looking bullish. Amazon is showing strength as well.