In this article, we discuss 5 stocks to buy as virus restrictions are lifted in China. If you want to read about some more stocks to buy as virus restrictions are lifted in China, go directly to 10 Stocks to Buy As Virus Restrictions Are Lifted in China.
5. Baidu, Inc. (NASDAQ:BIDU)
Number of Hedge Fund Holders: 47
Increase in Share Price Over Past Month: 22.17%
Baidu, Inc. (NASDAQ:BIDU) provides internet search services. The company posted earnings for the first quarter of 2022 in late May, reporting earnings per share of $1.77, beating market estimates by $0.94. The revenue over the period was close to $4.5 billion, up 1% compared to the revenue over the same period last year and beating market estimates by $320 million. The firm attributed the earnings beat to the “non-online ad business”, which registered a 35% year-over-year increase that was “driven by cloud and other AI-powered businesses”.
On May 31, Susquehanna analyst Shyam Patil maintained a Positive rating on Baidu, Inc. (NASDAQ:BIDU) stock with a price target of $200, noting that the long-term view on the firm was unchanged despite near-term China uncertainties.
At the end of the first quarter of 2022, 47 hedge funds in the database of Insider Monkey held stakes worth $1.5 billion in Baidu, Inc. (NASDAQ:BIDU), compared to 38 in the preceding quarter worth $1.4 billion.
In its Q3 2021 investor letter, Ariel Investments, an asset management firm, highlighted a few stocks and Baidu, Inc. (NASDAQ:BIDU) was one of them. Here is what the fund said:
“When we have such a high level of conviction for a company it is not uncommon for us to own it in size across our portfolios. Such is the case with technology giant Baidu, Inc. (NASDAQ:BIDU), whose leading search engine has been dubbed the “Google of China.” This quarter shares sold off in sympathy with the Chinese internet sector as investors were rattled by the government’s sweeping regulatory crackdown intended to promote “common prosperity” by easing wealth inequality. While we recognize the greater political risk of investing in emerging markets such as China and incorporate an appropriately higher risk premium in the discount rate in our valuation models, we believe Baidu’s business strategy is aligned with national policies and priorities and is therefore not adversely impacted unlike some other players in the internet sector who are in the eye of the storm.
Indeed, the Chinese government recognizes Baidu’s large, upfront investments in many next-generation artificial intelligence (AI) technologies and hails it as a national champion. For example, the company’s Advanced Driving Support System (ADAS), Apollo, has twice as much data on miles driven than any other initiative in the world, giving Baidu (and China) a large lead in the global AI arms race. In addition, Baidu’s cloud offering touts highly differentiated Platform as a Service (PaaS) features and capabilities for a demanding enterprise customer base. While these initiatives are a temporary drag on margins and require long-term execution, their success will bolster China’s “dual circulation” strategy aimed at spurring domestic demand, innovation and self-reliance.” (Click here to see the full text)
4. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 100
Increase in Share Price Over Past Month: 24.83%
Alibaba Group Holding Limited (NYSE:BABA) is a diversified technology company. On June 8, the stock climbed more than 10% in a single trading day after more approvals for video games licenses in China. The approvals, of which Alibaba is also a beneficiary, are the latest sign that the Chinese authorities are easing a regulatory crackdown that has haunted dual-listed tech firms in the country. The approvals also mean that the government in Beijing is now actively working to support the growth in the tech industry.
On May 31, Truist analyst Youssef Squali maintained a Buy rating on Alibaba Group Holding Limited (NYSE:BABA) stock and raised the price target to $145 from $132, noting that there were positive early signs for Chinese audit concessions amid US pressure.
Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Alibaba Group Holding Limited (NYSE:BABA), with 14.4 million shares worth more than $1.5 billion.
In its Q1 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Alibaba Group Holding Limited (NYSE:BABA) was one of them. Here is what the fund said:
“We have eliminated 6 holdings during the first quarter (including) Alibaba Group Holding Limited (NYSE:BABA). We have sold our Alibaba Group Holding Limited (NYSE:BABA) position as the company continues to face competitive challenges and regulatory pressures remain, making it difficult (if not impossible) to appropriately assess the range of outcomes and associated probabilities for the future profitability of the business.”
3. NIO Inc. (NYSE:NIO)
Number of Hedge Fund Holders: 26
Increase in Share Price Over Past Month: 26.76%
NIO Inc. (NYSE:NIO) makes and sells smart electric vehicles. On June 10, the company announced that it would start producing electric vehicle battery packs that it had developed in-house by the second half of 2024. The announcement marks a key milestone for the firm which is looking to compete with large EV makers in China and beyond. In the long-term, the firm plans to use a combination of self-produced and externally sourced batteries, a business model similar to the EV giant Tesla.
On June 12, Macquarie analyst Erica Chen maintained an Outperform rating on NIO Inc. (NYSE:NIO) stock and lowered the price target to $27.40 from $28.30, backing the market to appreciate the momentum trends of the company.
At the end of the first quarter of 2022, 26 hedge funds in the database of Insider Monkey held stakes worth $716 million in NIO Inc. (NYSE:NIO), compared to 30 in the preceding quarter worth $813 million.
2. Vipshop Holdings Limited (NYSE:VIPS)
Number of Hedge Fund Holders: 20
Increase in Share Price Over Past Month: 29.10%
Vipshop Holdings Limited (NYSE:VIPS) operates as an online discount retailer. On May 19, the firm posted earnings for the first quarter of 2022, reporting earnings per share of $0.33 and a revenue of around $4 billion. The revenue was up more than 11% compared to the revenue over the same period last year. In guidance numbers for the second quarter, the firm said it expected revenue to be around RMB22.2 billion and RMB23.7 billion, representing a year-over-year decrease rate of approximately 20%.
On March 14, JPMorgan analyst Andre Chang maintained a Neutral rating on Vipshop Holdings Limited (NYSE:VIPS) stock and lowered the price target to $7 from $9, noting that the low valuation of the firm was making the share price more resilient than Chinese peers in the US.
At the end of the first quarter of 2022, 20 hedge funds in the database of Insider Monkey held stakes worth $389 million in Vipshop Holdings Limited (NYSE: VIPS), compared to 30 in the preceding quarter worth $329 million.
1. Futu Holdings Limited (NASDAQ:FUTU)
Number of Hedge Fund Holders: 11
Increase in Share Price Over Past Month: 44.61%
Futu Holdings Limited (NASDAQ:FUTU) provides wealth management services. On June 6, the firm posted earnings for the first quarter of 2022, reporting earnings per share of $0.49, beating market estimates by $0.07. The revenue over the period was $209 million, down close to 25% compared to the revenue over the same period last year but beating market estimates by more than $7 million. The total number of paying clients for the firm increased 67.9% year-over-year to 1.33 million at the end of March.
On June 10, Bank of America analyst Emma Xu upgraded Futu Holdings Limited (NASDAQ:FUTU) stock to Buy from Underperform and raised the price target to $60.60 from $44.50, noting that the firm had multiple positive business developments ahead.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Tiger Global Management LLC is a leading shareholder in Futu Holdings Limited (NASDAQ:FUTU), with 2.4 million shares worth more than $80 million.
You can also take a peek at 10 Penny Stocks Redditors are Buying in August and 10 Best Nickel Stocks to Buy Now.
