Alibaba Group Holding Limited BABA is currently one of the top-performing stocks in the technology sector and an increase in share price and strong fundamentals signal its bullish run. Therefore, if you haven’t taken advantage of the share price appreciation yet, it’s time you add the stock to your portfolio.
The company has performed well this year and has the potential to carry on the momentum in the near term.
Why an Attractive Pick?
Share Price Appreciation: A glimpse of the company’s price trend shows that the stock has an impressive run on the bourses year to date. Alibaba has returned 96.6% compared with the industry’s rally of 60.6%.
Solid Rank: Alibaba sports a Zacks Rank #1 (Strong Buy). Thus, the company appears to be a compelling investment proposition at the moment.
Northward Estimate Revisions: Six estimates for the current year have moved north over the past 60 days against no southward revisions, reflecting analysts’ confidence in the company. Over the same period, the Zacks Consensus Estimate for the current year has increased 6.0%. Also, for fiscal 2019, the Zacks Consensus Estimate has inched up 4.0% to $6.73.
Positive Earnings Surprise History: Garmin has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in three of the trailing four quarters, with an average positive earnings surprise of 14.95%.
Strong Growth Prospects: The company’s Zacks Consensus Estimate for fiscal 2018 earnings of $5.21 reflects year-over-year growth of 52.8%. Moreover, earnings are expected to register 29.3% growth in fiscal 2019. The stock has long-term expected earnings per share growth rate of 30.7%.
Growth Drivers
Alibaba's solid growth in the company’s core e-commerce business, strong growth in metrics, mobile strength and international expansion helps it in generating significant revenues.
Other drivers include strong cloud computing business. In a bid to expand the reach of its cloud platform, the company has open data centers in a number of places, including India and Indonesia. Besides this, the company has also signed cloud agreements with a number of companies to address the rising demand for cloud services. According to the latest fiscal second quarter earnings release, the company’s cloud computing business grew 99% year over year,
Also, Alibaba’s growth has been sparked by a spike in new initiatives like entertainment. Recently, Alibaba's streaming video site Youku signed new content licensing deals with Comcast's NBCUniversal and Sony Pictures, further strengthening its foothold in the media industry. In its latest quarterly release, the digital media and entertainment division registered growth of 33% year over year.
Apart from this, the e-commerce giant is leaving no stone unturned to explore new avenues. Recently, the company teamed up with Ford Motor Company F to strengthen its presence in the automotive space.
We believe that increasing investments and innovation in various fields and strong financial position will continue to drive the company’s long-term growth.
Alibaba Group Holding Limited Price and Consensus
Alibaba Group Holding Limited Price and Consensus | Alibaba Group Holding Limited Quote
Other Stocks to Consider
A few other top-ranked stocks in the broader technology sector are Groupon Inc. GRPN, and SMART Global Holdings, Inc. SGH, each carrying a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings per share growth rate for Groupon, PetMed Express and SMART Global is projected at 7% and 15%, respectively.
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