Alibaba Group Holding Limited (NYSE:BABA) stock now trades at less than a 50 P/E, a buy call feels like a no brainer

Alibaba Group Holding Limited (NYSE:BABA) stock now trades at less than a 50 P/E, a buy call feels like a no brainer

Alibaba Group Holding Limited (NYSE:BABA) stock now trades at less than a 50 P/E, a buy call feels like a no brainer

Alibaba (NYSE:BABA) unsurprisingly beat expectations for its 2019 fiscal year. Despite overarching trade tensions that have been grabbing headlines, Alibaba stock benefits from a diversified online-driven interest that somewhat insulates it from tariffs.

The thing is, Alibaba’s business interests are so expansive from ecommerce to cloud computing to logistics solutions to international retail, they are poised to continue do well in spite of heightened trade war-related volatility.

While it’s true that I have been bullish on BABA stock over the past two years, that bullishness has not been misplaced. Alibaba has proven that it is an unstoppable force as it dominates and innovates within the Chinese domestic retail sector and expands its reach internationally.

How Alibaba Stock Stacks Up

Though off its highs, BABA stock in aggregate is still worth $460 billion. It is a massive company that still manages to deliver 51 percent revenue on a quarterly and fiscal basis. To show how impressive that is, tech darling Amazon (NASDAQ:AMZN), delivered just 17 percent over the prior quarter and 25 percent on a fiscal year-over-over basis.

This is at a time too when AMZN has admitted that growth is slowing. Based on the recent figures, BABA is clearly on a different trajectory.

If we look at the all important gross merchandise value (GMV) metric. AMZN is in the neighborhood of $300 billion, and we know that that will grow as a slower pace than the past. BABA GMV transacted on its China retail marketplaces was the equivalent of $853 billion dollars for the year.

It’s hard to grow when the numbers get that big but BABA did just that. $853 billion marks 19 percent growth year-over-year. That’s not even including its international retail ventures like Lazada and other investments.

It’s kind of incredible that the quarterly revenue breakdowns show every category growing by at least 20 to 30 percent. Meanwhile costs as a percentage of revenue, whether it be product development or sales & marketing or general have remained relatively constant.

Driving a good portion of that growth is more effective user acquisition and penetration into less developed cities. Alongside those new users have been enhancements to improve click-through rate and purchase conversion.

What BABA is doing is working.

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

By the way, prices are vulnerable to a correction towards 174.23.

The projected upper bound is: 168.38.

The projected lower bound is: 148.41.

The projected closing price is: 158.39.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 29 white candles and 21 black candles for a net of 8 white candles.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 7.9181. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 8 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 30.45. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 1 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -139.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 5 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 11 period(s) ago.

Rex Takasugi – TD Profile

ALIBABA GRP ADR closed down -4.600 at 158.830. Volume was 73% above average (neutral) and Bollinger Bands were 91% wider than normal.

Open High Low Close Volume___
162.470 162.800 158.070 158.830 5,452,248

Technical Outlook
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 170.75 181.22 164.57
Volatility: 51 36 44
Volume: 4,963,164 3,164,929 4,069,321

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

ALIBABA GRP ADR is currently 3.5% below its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of BABA.N at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on BABA.N and have had this outlook for the last 9 periods. The security price has set a new 14-period low while our momentum oscillator has not. This is a bullish divergence.

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