In this article, we will discuss the 10 best China stocks to buy now.
According to a report published by Wall Street Journal, China’s key benchmark, MSCI China Index, gained 27% in 2020, exhibiting the economic recovery during the global economic clampdown. However, in September, the Chinese stock market stumbled following the collapse of Chinese real estate company Evergrande, as it faced deadlines for bond interest payments worth billions of dollars.
Due to the lack of industrial activity in China, the country’s third-quarter GDP grew by 4.9%, versus the analysts’ expectations of 5.2%, as reported by CNBC. However, in October, Chinese stocks presented a solid growth after the Golden Week holiday, with services activity returning to productive levels.
According to a report published by Bloomberg, NASDAQ Golden Dragon China Index gained 13% in October, marking its best month in 2021.
Value Stocks and China
According to a paper published on The China-U.S. Equity Valuation Gap, before 2009, the market average PE ratio of Chinese companies was reported to be 11.49 points higher than the U.S. firms and 19.62 points higher when compared with the emerging markets. Kenny Wen from Everbright Sung Hung Kai recently said that investments in Chinese stocks can reap profits for aggressive investors. Wen also thinks that the Hong Kong market is undervalued.
Some of the notable stocks in this regard are JD.com, Inc. (NASDAQ:JD), Pinduoduo Inc. (NASDAQ:PDD), Bilibili Inc. (NASDAQ:BILI), NetEase, Inc. (NASDAQ:NTES), and NIO Inc. (NYSE:NIO).
Our Methodology:
Let’s analyze our list of the best China stocks to buy now. The majority of stocks mentioned below are China-based companies, traded on the U.S. exchanges. For this list, we also took into account hedge fund sentiment, long-term growth potential, and analysts’ ratings.
Best China Stocks to Buy Now
10. Canaan Inc. (NASDAQ:CAN)
Number of Hedge Fund Holders: 11
Canaan remains one of the most popular Chinese companies among hedge funds.
At the end of Q2, 11 hedge funds tracked by Insider Monkey reported owning stakes in Canaan Inc. (NASDAQ:CAN), up from 9 in the previous quarter. The total worth of these stakes is over $48.5 million. Renaissance Technologies is the company’s leading shareholder, owning over 1.2 million shares.
The company’s revenue in the third quarter jumped 700%.
9. Weibo Corporation (NASDAQ:WB)
Number of Hedge Fund Holders: 14
Chinese social media company Weibo Corporation (NASDAQ:WB) gained 10% on November 10, as it announced strong Q3 results. The company posted an EPS of $0.90, beating the estimates by $0.05. Weibo Corporation (NASDAQ:WB) reported revenue of $607.4 million, up 30.4% from the prior-year quarter.
Recently, Citigroup highlighted the stable social media status of Weibo Corporation (NASDAQ:WB) and lifted its price target on the company to $66, with a Buy rating on the shares.
Smart money is also taking interest in Weibo Corporation (NASDAQ:WB) as of the 873 hedge funds tracked by Insider Monkey, 14 hedge funds had positions in Weibo Corporation (NASDAQ:WB) as of the end of Q2, up from 12 in the previous quarter. These stakes are valued at over $128 million.
8. Li Auto Inc. (NASDAQ:LI)
Number of Hedge Fund Holders: 20
With the rise in electric vehicles around the world, Li Auto Inc. (NASDAQ:LI) remains one of the best China stocks to buy now. Recently, Citigroup highlighted the company’s growing position in China’s new energy vehicle market. The firm lifted its price target on Li Auto Inc. (NASDAQ:LI) to $200, with a Buy rating on the shares.
At the end of Q2, 20 hedge funds tracked by Insider Monkey remained bullish on Li Auto Inc. (NASDAQ:LI), up from 18 in the previous quarter. The total value of these stakes is over $457.4 million. In Q3, Coatue Management is the company’s largest shareholder, owning roughly 2 million shares.
In October, Li Auto Inc. (NASDAQ:LI) delivered 7,649 electric cars, presenting a 107% growth from the prior-year quarter. In Q3, the company reported revenue of $780.4 million, presenting a 158.8% year-over-year growth.
7. BeiGene, Ltd. (NASDAQ:BGNE)
Number of Hedge Fund Holders: 21
BeiGene, Ltd. (NASDAQ:BGNE) is a China-based biotech company. Insider Monkey’s Q2 data shows that hedge funds are getting bullish on BeiGene, Ltd. (NASDAQ:BGNE) as 21 hedge funds tracked by Insider Monkey reported owning stakes in the company, up from 19 in the previous quarter. The total value of these stakes is roughly $6.2 billion. The company’s recent biotech advances in lymphoma treatment make it one of the best China stocks to buy now.
This October, Bernstein initiated its coverage on BeiGene, Ltd. (NASDAQ:BGNE) with an Outperform rating and a $431 price target. The firm presented a positive outlook on the company, fueled by the deployment of technological reforms.
6. Tencent Holdings Limited (OTC:TCEHY)
Number of Hedge Fund Holders: N/A
Tencent Holdings Limited (OTC:TCEHY) is a Chinese multinational technology holding company that offers internet-related services and products.
In Q3, Tencent Holdings Limited (OTC:TCEHY) reported revenue of $22 billion, up 13% from the prior-year quarter. The company also reported a 5% growth in revenues from online advertising, fueled by consistent efforts of advertiser categories, such as consumer staples and internet services. Recently, Barclays initiated its coverage on Tencent Holdings Limited (OTC:TCEHY) with an Overweight rating and an $84 price target.
Like JD.com, Inc. (NASDAQ:JD), Pinduoduo Inc. (NASDAQ:PDD), Bilibili Inc. (NASDAQ:BILI), NetEase, Inc. (NASDAQ:NTES), and NIO Inc. (NYSE:NIO), Tencent Holdings Limited (OTC:TCEHY) is also one of the most notable Chinese stocks in 2021.
5. NIO Inc. (NYSE:NIO)
Number of Hedge Fund Holders: 34
NIO Inc. (NYSE:NIO), a Chinese automobile manufacturer, announced solid Q3 results on November 9. The company posted an EPS of -$0.06, beating the estimates by $0.04. For Q4, NIO Inc. (NYSE:NIO) expects the delivery of vehicles to be between 23,500 and 25,500 vehicles, presenting a growth of 35.6% to 46.9%.
NIO Inc. (NYSE:NIO), one of the best China stocks to buy now, delivered a 26.2% return to shareholders in the past six months. Recently, Deutsche Bank raised its price target on NIO Inc. (NYSE:NIO) to $70, with a Buy rating on the shares. The firm’s analyst expects the company’s monthly sales to improve in the coming quarters.
At the end of Q2, 34 hedge funds tracked by Insider Monkey reported owning stakes in NIO Inc. (NYSE:NIO), up from 28 in the previous quarter. The total value of these stakes is over $2 billion, compared with $1.3 billion in Q1.
4. NetEase, Inc. (NASDAQ:NTES)
Number of Hedge Fund Holders: 43
NetEase, Inc. (NASDAQ:NTES) is a Chinese internet company that provides online services to its consumers. In Q2, the company posted an EPS of $0.97, beating the estimates by $0.03. With the rising demand for 5G around the world, NetEase, Inc. (NASDAQ:NTES) remains one of the best China stocks to buy now.
NetEase, Inc. (NASDAQ:NTES) pays an annual dividend of $0.95 per share. The stock’s current dividend yield stands at 0.85%. This August, China Renaissance assumed its coverage on the stock with a Buy rating and a $129 price target.
At the end of Q2, 43 hedge funds tracked by Insider Monkey were bullish on NetEase, Inc. (NASDAQ:NTES), with stakes valued at over $3.7 billion. In the previous quarter, 32 hedge funds had positions in the company, highlighting a positive hedge fund sentiment in Q2. Fisher Asset Management is the leading shareholder of NetEase, Inc. (NASDAQ:NTES) in Q3, with over 1.7 million shares.
3. Bilibili Inc. (NASDAQ:BILI)
Number of Hedge Fund Holders: 47
Bilibili Inc. (NASDAQ:BILI) is a Chinese video-sharing website that covers a wide range of genres, including games, animation, and comics. In Q2, 47 hedge funds tracked by Insider Monkey reported owning stakes in Bilibili Inc. (NASDAQ:BILI), compared with 53 in the previous quarter. The total value of these stakes is over $2 billion.
This October, Morgan Stanley lifted its price target on Bilibili Inc. (NASDAQ:BILI) to $100, with an Overweight rating on the shares. The firm’s analyst expects an 18% year-over-year growth in the company’s revenue in Q3.
In the past year, Bilibili Inc. (NASDAQ:BILI) delivered a 10% return to shareholders. Lone Pine Capital is the company’s largest shareholder in Q3, owning over 8.6 million shares.
Tao Value mentioned Bilibili Inc. (NASDAQ:BILI) in its Q3 2021 investor letter. Here is what the firm has to say:
“As witnessed in the past quarter, the government intervention in Chinese private sector is elevated to an unprecedented level. Given this background, I thoroughly reviewed all our Chinese holdings and made a few changes. We also exited Bilibili (ticker: BILI), given its priced-in valuation in the context of Chinese ADR confidence loss.”
2. Pinduoduo Inc. (NASDAQ:PDD)
Number of Hedge Fund Holders: 49
As the Chinese government announced to make its home-grown internet in the coming years, Pinduoduo Inc. (NASDAQ:PDD), an agriculture-focused technology platform, remains one of the best China stocks to buy now. Recently, Barclays initiated its coverage on Pinduoduo Inc. (NASDAQ:PDD) with an Equal Weight rating and a $130 price target, highlighting the positive growth in China’s tech sector.
In Q2, 49 hedge funds tracked by Insider Monkey reported owning stakes in Pinduoduo Inc. (NASDAQ:PDD), down from 56 in the previous quarter. The total value of these stakes is over $5.2 billion. In Q3, Tiger Global Management is the largest shareholder of Pinduoduo Inc. (NASDAQ:PDD), with shares worth $1.2 billion.
Baillie Gifford mentioned Pinduoduo Inc. (NASDAQ:PDD) in its Q2 2021 investor letter. Here is what the firm has to say:
“As many countries enjoy a relaxation of Covid restrictions, Mr Market is focussed on short-term beneficiaries of ‘the pleasure after the plague’. There are interesting parallels with the Roaring 20s here, but to our minds, they extend beyond post-pandemic hedonism. Much of the new wealth created in the 1920s was patchily distributed and accompanied by a pervasive sense that the older generation had let down younger people. In 1920, John F. Carter, an irate 23-year-old wrote “the older generation had certainly pretty well ruined this world before passing it on to us. We have been forced to live in an atmosphere of ‘tomorrow we die,’ and so, naturally, we drank and were merry.”
In a similar vein, some of the greatest Growth opportunities are materialising from the companies that are shifting humankind towards more sustainable ways of consuming by driving efficiencies and eliminating surplus. Pinduoduo’s ‘farm to table’ platform is one example – cutting out huge waste in farm produce and short circuiting layers of infrastructure by matching Chinese food supply and demand through a group buying model. In a similar vein, Meituan is well on the way to developing China’s primary ‘Software as a Service’ ecosystem for food distribution which we believe has a strong chance of replacing wasteful wet markets as the primary channel for transacting in produce.
Pinduoduo’s share price pulled back following news that Chinese regulators are investigating possible anti-competitive activities by the country’s large online companies. However, Pinduoduo appears well placed to navigate such regulatory scrutiny in the long-term, helped in part by its community buying business model that benefits consumers, manufacturers and farmers alike. Its business fundamentals are stellar– the company remains the largest Chinese e-commerce platform, with over 820 million annual active users (surpassing Alibaba and JD.com), while revenue growth increased by 239% over the previous year.”
1. JD.com, Inc. (NASDAQ:JD)
Number of Hedge Fund Holders: 76
JD.com, Inc. (NASDAQ:JD) is a leading Chinese e-commerce company. The company made it to our list of the best China stocks to buy now as analysts regard Chinese internet stocks as crucial to the country’s economy in the coming years.
The company posted record sales for Singles Day.
Recently, Goldman Sachs lifted its price target on JD.com, Inc. (NASDAQ:JD) to $123, with a Buy rating on the shares.
Of the 873 hedge funds tracked by Insider Monkey, 76 hedge funds reported owning stakes in JD.com, Inc. (NASDAQ:JD) in Q2, up from 75 in the previous quarter. These stakes are valued at over $10.6 billion.
Arisaig Partners mentioned JD.com, Inc. (NASDAQ:JD) in its Q2 2021 investor letter. Here is what the firm has to say:
“JD.com, for example, continues to display impressive operating momentum, with sales on track to grow around 30% this year by our estimates. Looking longer term, this company is making a credible claim to be the dominant player in Chinese grocery ecommerce, an enormous chunk of overall consumption in China, and the last one yet to move online in a big way. We think that JD has a clear advantage over rivals here thanks to its integrated and fully self-managed logistics capabilities. Whereas an offline big box retailer might have 10-20,000 SKUs, JD offers 8 million. 90% of orders fulfilled by JD Logistics can be delivered on the same day or the next day to 500 million customers. The fact that JD has just 30 days of inventory tells us that this is a highly-optimised fulfilment chain. It is very hard to be both fast and efficient, and in order to achieve this it is necessary to know what inventory to hold in which warehouse, and when to hold it (“right place, right time, right person”), a highly information-intensive challenge. The only other retailer that comes close to being able to manage that level of complexity is Amazon, and indeed these are capabilities that are very hard to replicate, taking decades of painstaking investment, trial and error testing, and data accumulation.
Moreover, far from being some sort of ‘victim’, this company is most likely a beneficiary of tighter regulation in this sector. A recurrent message running through JD’s recent investor day was that of “deep purpose”, the objective being to create shared value for a broader ecosystem of customers, merchants and employees. As we describe in the next section on “Navigating China”, this form of alignment with the strategic objectives of the government is a very China-specific way of conceptualising ESG, and essential for all businesses that operate in this country to get right…” (Click here to see the full text)
You can also take a look at 10 Best European Bank Stocks to Buy Now and 10 Best Real Estate Stocks To Buy Now
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Disclosure. None. 10 Best China Stocks to Buy Now is originally published on Insider Monkey.
