Sometimes market shakeups are actually good news. And in the case of one stock in particular, trade war fears have given investors a huge buying opportunity.
This is a company that owns a dominant share in a $1.3 trillion market, and one that eMarketer projects to grow 30% this year.
But with investors on edge over trade tensions between the United States and China, shares of this stock have plunged more than 20% since early May.
That puts this stock well below its fair value, which is why it just got a top score from our Money Morning Stock VQScore™ system.
It's not that this wasn't already a stock to buy. Money Morning Executive Editor Bill Patalon has been recommending this stock since 2016, when the share price was less than half of what it is today.
But Bill has doubled down on that recommendation since then, calling the pick a "single-stock wealth machine."
It's a stock that you can own for decades, accumulating more every time the share price dips, and watch the gains pile up.
In fact, Bill calculates that each share - currently priced well under $200 - will be worth over $2 million in four decades.
And while tariffs might have some short-term impact, they aren't going to do much to slow down a company that just posted nearly 50% revenue growth in its last fiscal year.
So if you haven't jumped on board this juggernaut yet, now's your chance.
Because you probably won't be able to get it at this price ever again...
This Company's Success Speaks for Itself - and It's Not About to Slow Down Now
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Considering that 58% of Chinese online shopping goes through Alibaba Group Holding Ltd. (NYSE: BABA), it makes sense that the company has been called the "Amazon of China." But at this point, Alibaba's performance stands on its own.
Consider its $30.3 billion in sales on "Singles' Day" last November. That's China's biggest shopping day of the year - and the biggest shopping day in the world.
Not only was that 27% better than Alibaba's total the year before, but it dwarfed Amazon.com Inc.'s (NASDAQ: AMZN) Prime Day total of $4.2 billion in sales.
In fact, in the four-day stretch that covers "Black Friday" and "Cyber Monday," 4,500 U.S. retailers generated just $14.1 billion in online sales - barely half of Alibaba's one-day take.
Perhaps that's why Amazon cried uncle and announced in April that it would be shutting down its digital marketplace in China.
Alibaba is simply the unquestioned e-commerce leader in China. Its 58% market share is more than three times that of its closest competitor.
Its marketplaces have more than 650 million active users - twice the population of the United States. And that number is still growing at an 18% annual clip - more than 100 million per year.
Don't expect that to slow down any time soon. Research firm eMarketer projects that China's $1.3 trillion e-commerce market will approach $2 trillion in 2019.
That's not Alibaba's only source of revenue either. Its cloud services platform is the most widely used in China, and revenue in that segment grew by 84% last year. The company also took the lead in the food delivery market after its acquisition of Ele.me in April 2018.
Alibaba also holds a 33% stake in the company that runs Alipay, China's leading digital payments platform. That's in a market where Business Insider reports that mobile payments have become so common that even street vendors and taxi drivers prefer them over cash.
The long-term picture for Alibaba doesn't change much, even considering the chatter about trade wars. Analyst Rob Sanderson of Loop Capital noted this month that China is in the process of shifting its economy toward a consumption-driven model.
"We think this insulates Alibaba from macro issues like slowing exports or trade wars," Sanderson said. He rated Alibaba a "Buy" and set a target of $250 - 65% higher than its current price.
Sanderson is one of a few dozen analysts with that opinion, which is why today's price is not likely to last long.
This Is the Perfect Time to Buy BABA
In spite of BABA's price drop over the last few weeks, it's still up more than 10% in 2019 so far. But that's paltry when looking at the company's fundamentals.
Revenue in the last quarter came in at 51% higher than the same quarter the year before. That matches Alibaba's compound annual growth rate going back to 2012, during which time revenue has grown from $3.1 billion to $56.1 billion.
Net income has kept pace, totaling $13 billion last year. That's up 35% from the year before. And earnings per share is projected to more than double in the next three years, according to FactSet.
Considering that Alibaba just beat expectations by 31% last quarter, don't be surprised if the final numbers are even better than that.
Wall Street analysts aren't blind to BABA's value either. In addition to Sanderson, more than 40 other analysts - 100% of those tracked by FactSet - call the stock a "Buy" or "Overweight." The average price target is 44% above today's price.
That's in line with BABA's price/earnings ratio for the next 12 months, which comes in a 30% discount to the industry average.
There's little question that Alibaba will deliver returns for years to come. But if you want to get it while it's still reasonably priced - and significantly undervalued - your window of opportunity is limited.
If you grab your shares now, you can enjoy the ride for years (or decades) to come.
And if you're looking for more ways to profit, we've got you covered...
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About the Author
Stephen Mack has been writing about economics and finance since 2011. He contributed material for the best-selling books Aftershock and The Aftershock Investor. He lives in Baltimore, Maryland.