You'd think that being labeled as the "Amazon of China" would be a compliment to any company operating in that country. After all, Amazon.com Inc. (Nasdaq: AMZN) is one of the greatest success stories of our time.
But for Alibaba Group Holding Ltd. (NYSE: BABA) and Alibaba stock, the comparison really misses the mark. While it is true that Alibaba is China's largest retailer, and according to Forbes is the sixth-largest retailer in the world, the company is so much more.
Everyone seems to be underestimating the company. And that is why Alibaba stock presents such a great opportunity for investors who see the company for what it really is. You see, Alibaba is perfectly positioned to profit from the massive changes now happening in China.
Money Morning Chief Investment Strategist Keith Fitz-Gerald has been recommending this stock since its IPO in 2014. The stock was up about 30% since then, and it leaped by more than 15% on June 8 after the company released an upbeat revenue outlook during its Analyst Day presentation. The audience literally gasped "wow" when the CFO spoke. And that tacked on about $40 billion in market capitalization in just one day.
Why? Because the company dominates China's e-commerce industry, and that's a big deal since China is the world's largest e-commerce market. Sales there could reach $2.4 trillion by 2020, according to eMarketer.
But that's only part of the story for the soaring Alibaba stock price.
China's new trillion-dollar "One Belt, One Road" initiative could end up being a massive catalyst for Alibaba stock for years to come...
How the Modern-Day Silk Road Could Drive Alibaba Stock Higher
As if owning the e-commerce space, providing a third-party platform for other retailers, offering cloud-computing services, data management, and the Alipay online and mobile payment solution were not enough, Alibaba is now the best way to play China's massive infrastructure and economic initiative.
Called "One Belt, One Road" (OBOR), the Chinese launched a massive transcontinental infrastructure initiative in 2013 meant to expand trade across 68 countries throughout Asia, Eastern Europe, and Africa. The plan includes over $1 trillion in infrastructure investment across the region.
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The name is meant evoke the Silk Road trade routes dating back to the Han Dynasty of 2,000 years ago. Linking the project to the historical trade route is likely a ploy meant to make it seem a natural development for China. But it is also a way to open up and develop infrastructure-poor regions - and markets - along the route.
"The goal is to redefine the global political and diplomatic 'orbit' by drawing entire countries into China's way of doing things," Fitz-Gerald said.
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And as investors worldwide continue to misunderstand Alibaba's businesses, few Westerners really know much about OBOR, let alone are investing in it.
The media is only now starting to cover it...
But that does not mean it slipped under the radar of other countries. None other than Russian President Vladimir Putin was in Beijing in May to ensure Russia's stake in President Xi Jinping's bid to move China to center stage in global affairs. Putin was one of 29 heads of state listening as Xi pledged $113 billion to the plan.
OBOR is going to boost Alibaba stock even further by helping build up neighboring economies and connecting them to China. The company will be able to expand its customer base on a global scale, all while the Chinese government foots the bill. That's not to mention what a growing Chinese economy will do for Alibaba's profits.
"Alibaba is working on advanced artificial intelligence, autonomous vehicles, and next-generation technologies that will bolster China's economy for decades to come," Fitz-Gerald said.
Analysts now project the stock could hit a price target of $180 this year, a 28% gain even after the huge one-day jump in price on June 8.
One Belt, One Road isn't just a $1 trillion plan - Fitz-Gerald thinks it could be as high as $5 trillion - to improve trade routes to China; it's also an ambitious attempt to reinvent China as a global economic power. It is an opportunity for smart investors to walk away with life-changing profits.
Up Next: How China's New Silk Road Is a Huge Opportunity for Investors