ALIBABA - The stock to watch out for in 2016!
After falling into a deep slumber, this dragon has finally awaken! This is one stock that I would recommend putting into one of our retirement portfolio stock. Retirement portfolio to me is a stock that one should hold long term.
Contrasting Fortunes
Just like when I recommended Facebook as a retirement stock on 31st July 2013, Alibaba is one such stock! The only difference is that after my recommendation on 31st July 2013, Facebook has almost tripled from $30 plus to $100 . At this minute, Facebook is now currently at $95.90.'
Article on Facebook recommendation in 2013:
http://www.danielloh.com/2013/07/this-may-be-one-stock-for-your.html
Alibaba, on the other hand, has dropped from $120 last november to the low point of $57.20. Their fortunes can't be more diverse.
In this one year, Alibaba has faced many challenges including lawsuits by US luxurious brands over counterfeit goods, China goverment slamming Alibaba over its management and illegal businesses, the crash of the China stock market. All these has given its stock price tremendous pressure.
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Jack Ma- the visionary and story teller
However, looking at the fundamental, I don't see Alibaba in this price for long!
This is one holygrail stock that consistently outperform market expectations. This is another Starbucks and Facebook in the making where almost every quarter it beats the earnings figures!
Any stock that beats the market every quarter must be taken seriously. The previous CEO, Jack Ma, must have drilled his army to execute well above their target.
To tell the truth, even before Alibaba got itself listed, I went to his headquarters in Shenzhen with my team, a seventh storey building where visitors are allowed to tour. "7" the employee tells us, is because Jack Ma likes that number. It is a number that is wholly.
Alibaba the story, was displayed when we entered the building. Flashes of photos about how Jack Ma built the company was displayed along the hallway. It has been told I guessed, a million times already by Jack Ma and his 35,000 employees.
"He likes to read novels", his employee cum tour guide told us. Alibaba even allocates a tour guide everyday to entertain visitors. The tour guide also mentioned, "He loves 金庸小说". 金庸 (Jin Yong) is of course one of the best story writer China ever produced. Jack Ma's story telling abilities must have been molded by Jin Yong.
The most important thing is that Jack Ma is a visionary who is able to guide his army to execute his vision and plans.
To me, as an investor, that is one important unorthodox ingredient I look for in a new IPO that might multiply!
<A founder or CEO who is charismatic in selling a vision>
Look at Tesla, Apple, Microsoft or Amazon stock price. Across the years, they have all surged because of their charismatic CEOs.
The greatest IPO in history happens for a reason
I have said many times to my students, "The greatest IPO in history always happen for a reason." The investment banks have done homework for us. They know that this stock can perform and is exciting to sell. That is the reason this stock can sell shares and often times, to make more money, they sell so much shares that it makes the IPO oversubscribed. Those greedy Wallstreet bankers!
That is also the reason that normally during the first year of a mega IPO, the stock will drop hard. It happens to Baidu, Visa, Google or even Facebook. They tanked in their first year of IPO, but came back strongly. Facebook's first year drops from $40 to $17. But Facebook price of $95 now makes $17 ridiculously cheap. It got oversold.
This is the same situation Alibaba might be in now. It dropped half priced. Normally when a mega IPO dropped half priced, we got to take note! It is finally cheap now!
Recent price surge may signal the start!
Recently looking at the price, we can see that it surge quite a bit from $57 to today's $71. Momentum is sure building just before its earnings and 11 november singles' big online sale.
To me, this is a retirement stock portfolio, meaning buy and don't sell for the next 5 years.
Be like Warren Buffet. Hold long term! Wait for one day, this stock to give dividends and receive passive income. Buy whenever it dips 10-15%. Don't care about market conditions, buy the BUSINESS!!!
For singapore and malaysia investors, it isn't hard nowadays to buy a US stock. Ask your local broker how to do it.
It is not easy to spot another retirement stock. It took me 2 years since I spotted Facebook in 2013.
Finally....
Rgds
Daniel Loh
www,danielloh.com
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Secrets of how investors should pick a good fundamental stock?
- What is wrong with value investing methodology
As US enter into the holiday filled season, I am optimistic that 4th quarter will be a strong one!
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