Alibaba Group Holding Ltd.ADR (BABA)

Alibaba is one of the biggest companies in China. It specializes in e-commerce, retail, fin-tech and AI. Jack Ma, the executive chairman, has recently announced that he is going to step down from current position in September 2019. Current CEO Yong Zhang will take over his position. Mr. Zhang has been with Alibaba for over 10 years. We believe he is a fully capable leader. There is no need for panic. It is going to be business as usual. Recently, Alibaba has increase its present in emerging markets such as India and Malaysia. It also form a strategic partnership with Russia. We should see strong revenue growth from these regions in next few years.

BABA is currently trading at $158.80/share as of today. It is close to the 52 weeks low mark of $152/share. The China-U.S. trade war concern definitely causes uncertainties in the market near term. We could see a trade talk resuming after the mid-term election. Short term traders should use a wait and see approach as the volatility is still high at the moment. However, we see more upsides in the long run. Alibaba has a strong balance sheet. Its forward P/E is at 20.72 which is a good range. Operating cash flow is in a healthy incline. Free cash flow has been consistently positive for the last 5 years. Sales to cash flow ratio is positive as well. We are bullish in the long run. Our price target is at $200/share by 2020.

P.S. we have a long position in BABA

Happy investing!

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