by: VectorVest Inc.
There’s no shortage of opinions on Alibaba, but what happens when you strip away the predictions and let the number do the talking?
We’ve used VectorVest’s Stock Analyzer tool to remove the emotion by letting the proprietary algorithms take over the tedious task of interpreting what the numbers have to say.
So, let’s take a look at what’s really going on with BABA, starting with VALUE.
While BABA has traded as high as $120.00 (Split-adjusted, November 13, 2014), its current Value, based on a combination of interest, inflation and earnings factors is whopping $228.28.
Compared to the September 27, 2016 close of $108.26, this means that BABA’s stock is significantly undervalued.
Does that mean it’s a good buy for the future though?
Take a look at Revelation 2 for the answer.
Remember, $228.28 is what BABA is worth at this moment. However, the market places its own value on what they are willing to pay. Any number of factors can hold stock’s back from reaching their true value, but the most important is how well (or poor) the company is expected to do in the future.
So, what’s needed next is an analysis of Alibaba’s long-term outlook. VectorVest’s RELATIVE VALUE (RV) indicator takes care of that by measuring the price appreciation potential over the next 1-3 years.
(Careful not to dismiss this indicator if you are a short-term trader – high RV stocks make excellent short-term trades too!)
Relative Value for Alibaba is 1.78 on the VectorVest indicator scale of 0.00 – 2.00 (anything above 1.00 is favorable), that means the prospects for BABA trading higher over the next 1-3 years are Excellent. It also means that BABA’s financials point to a 78% better potential ROI than you could expect from investing the same amount in a AAA corporate bond.
Good news! But there’s a couple more revelations in store for you, like whether this great potential future return is high enough to warrant the risk.
That’s the job of Relative Safety (RS). The RS indicator is like a financial report card for a company. It looks at how long the company has lasted, price volatility, long-term earnings history, sales volume and more. BABA has an RS rating of 1.03. (Remember, above 1.00 is favorable on the VectorVest scale.)
Not great, but not bad either.
Safety is Fair for BABA.
The fundamentals confirm that BABA is a solid company, but there’s still more that the VectorVest analysis has in store for you.
The ultimate trump card in our analysis is TIMING.
If you’ve ever bought a GREAT stock at the WRONG time, you’ve felt the pain it can cause first hand. By contrast, even the lousiest stock (umm… Enron, anyone?) can make an investor rich if they know when the time is right to buy and sell.
VectorVest believes that the time to buy a stock is when it’s already doing what you want it to do – that means rising in price -preferably in a rising industry and a rising market!
Talk about stacking the odds in your favor!
VectorVest’s Relative Timing indicator analyzes the price trend AND momentum for you. It analyzes all the dynamics of price, not just over 1-time frame, but four to let you know whether the stock is in an uptrend or downtrend and how fast it’s moving.
BABA has an RT of 1.59 – Price is in an uptrend for the short-term and momentum is Excellent.
VectorVest sums up both the fundamental (value and safety) and technical (price trend) indicators on Alibaba using a single indicator – VST (that stands for Value, Safety & Timing). Alibaba’s VST is 1.49, which is considered Very Good on the VectorVest Scale.
(Pssst….This master indicator is genius when it comes to ranking dozens, or even thousands, of stocks from best to worst. For example, VectorVest’s top ranked stock in the Internet/E-Commerce Industry Baozun Inc., BZUN with a Relative Value of 1.75, Relative Safety of 0.91, Relative Timing of 1.90 and a combined VST of 1.59, just edging out BABA for the #1 spot.)
At the end of the day though, you really just want to know whether to buy, sell or hold, right?
Well, according to VectorVest’s rule-driven rating system, Alibaba is currently a Buy due to its fantastic short-term price trend and strong fundamentals.
In closing, you should never buy a stock without a knowing when to sell. VectorVest calculates a stop-loss price for every stock, every day, and the stop for BABA is currently set at $95.95.
Not sure when to buy or sell? Let VectorVest’s Buy/Sell/Hold Ratings be your guide. VectorVest gave BABA its first Buy Rating of the year on March 17 at $74.25 for a 45% gain in just 6 short months.
Is BABA right for your portfolio? Only you can make that call, but now you have the un-biased information to help you make the most profitable decision.
Get all this information and more in VectorVest’s Instant Stock Analysis Reports – Visit www.vectorvest.be/analyze to analyze ANY stock FREE.
VectorVest has been providing the highest quality investment research to investors for 28 years. The company’s comprehensive approach to investing combines the insight of fundamental valuation with the power of technical analysis in an easy-to-use stock analysis software package designed for all types of investors. VectorVest provides a Buy, Sell or Hold rating for over 23,000 stocks each day based on its proprietary Value, Safety and Timing system. The demand for its indicators and market timing information has prompted worldwide expansion. Today VectorVest analyzes markets in the U.S., Canada, Europe, U.K., Singapore, Australia, Hong Kong and South Africa.