Our Alibaba Stock Price Prediction Shows Triple-Digit Gains

A group of 35 analysts surveyed by Thomson/First Call have an average price target of $106.9 for Alibaba Group Holding Ltd. (NYSE: BABA) stock. That represents a gain of almost 32% from today's opening price of $81.17.

Alibaba stock price predictionBut our Alibaba stock price prediction sees BABA climbing much higher than that in the long term.

In fact, Money Morning's Defense and Tech Specialist Michael A. Robinson says Alibaba "could be the single-greatest wealth opportunity of our lifetime."

BABA stock has dipped 22% in 2015 and was trading below $81 per share early Monday. But despite its drop, Alibaba shares are one of the best long-term buys on the market.

And there are three major catalysts that will drive the Alibaba stock price higher in the next few years...

Alibaba Stock's Three Biggest Catalysts

The first major catalyst for Alibaba stock is the growing Chinese e-commerce industry.

In 2013, online shopping in China was a $298 billion industry. That surpassed the United States as the largest e-commerce market in the world.

New research from AT Kearny estimates Chinese e-commerce will total $718 billion by 2017.

A recent study by the China Internet Network Information Center (CNNIC) determined the number of Internet users in the country will hit 800 million by 2016 or sooner. By comparison, the entire current population of the United States is just 319 million.

Alibaba Group Holding Ltd.

Recent Price: $81.17

Market Cap: $200.8 billion

2015 EPS Estimate: $2.19

Operating Margin: 36.9%

"Alibaba is gaining traction in its home market in China just as that country's people are truly joining the Internet revolution," Robinson said. "And the development of easy-to-use mobile commerce is giving Alibaba a strong tailwind."

That mobile development is Alibaba's second catalyst.

Alibaba has invested heavily in its mobile development. In February, it spent $590 million on a minority stake in the Chinese smartphone maker Meizu. Before that, Alibaba spent $1.9 billion on the mobile web developer UCWeb. It also dropped $215 million for a minority stake in the messaging app Tango.

Those investments are starting to pay off...

Last quarter, Alibaba reported 265 million mobile monthly active users. That was a yearly increase of 95%. Gross merchandise volume from mobile platforms increased 213%.

According to the research firm Gartner, mobile payment transactions will grow by 35% annually through 2017. The global market for mobile payments will reach $721 billion by the end of 2017.

The third Alibaba stock price catalyst will be the company's rock-solid financials.

Alibaba will report March quarter and fiscal year 2015 earnings results on May 7. Analysts expect revenue to grow 44% in the quarter. That's incredible growth for a company bringing in $2.8 billion per quarter.

Operating margins are strong at almost 37%. The company has more than $6 billion in operating cash flow, which gives it great flexibility for acquisitions.

Gross merchandise volume has been on the rise as well. Last quarter, the company reported GMV growth of 49%. That was spurred by a user base that grew to 334 million people.

With those three catalysts in mind, Money Morning's Executive Editor Bill Patalon has made his Alibaba stock price prediction. He sees the stock climbing much higher from here...

Alibaba Stock Price Prediction: Triple-Digit Gains Ahead

Patalon says investors should not be worried about the recent short-term struggles of BABA stock.

"This is a normal thing for a stock after an IPO," Patalon said. "People rushed in and probably drove the price up higher than it was worth at the time."

But that doesn't diminish the company's potential.

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"This company has market power, a visionary leader, and it's making smart decisions," he explained. "They're trying to build something special. A paradigm-shifting, rule-breaking company. They're trying to create new ways of doing things."

Alibaba has a market cap of $200 billion right now. But Patalon sees Alibaba becoming a $1 trillion company by 2020.

At that market cap, the Alibaba share price will be roughly each $400. That's a gain of 400% in the next five years.

"What you have to look at is the long-term potential, which is still huge," Patalon said. "They still haven't even maxed out their own market. They're bringing in entertainment companies and new business-to-business ventures. They're going to keep expanding their offerings."

And Patalon urges investors to look past the near term when it comes to his Alibaba stock price prediction.

"This isn't just a stock to buy for 2015," he explained. "This is a great investment for years to come. If you invest money that you can afford to lose and hold onto the stock for several years, you'll end up being very surprised by how much you've made."

The Bottom Line: Alibaba stock has dipped 22% in 2015, but our Alibaba stock price prediction has BABA shares climbing much higher in the long term. Chinese e-commerce, mobile growth, and solid financials could all drive Alibaba to a $1 trillion valuation by 2020.

The Best Way to Invest in BABA Stock Now: While the profit potential for Alibaba stock is huge, this isn't a company that you "back up the truck" and invest your life savings into. Instead, Money Morning experts have developed the best strategy for investing in Alibaba stock now...

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