Author: ED CARSON
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China is the world’s No. 2 economy and home to dozens of companies that trade in the U.S. Right now, Pinduoduo parent PDD Holdings (PDD), Baidu (BIDU), Trip.com (TCOM), Tencent Holdings (TCEHY) and NetEase (NTES) are China stocks worth watching or potentially buying.
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It’s been a tough couple of years for Chinese stocks. The Covid pandemic, and Beijing’s zero-Covid policy, have slammed the economy. Meanwhile, regulatory crackdowns vs. technology and data-centric firms such as Alibaba (BABA), Tencent (TCEHY) and NetEase (NTES) have been a major headwind. The tech crackdown seems to have eased.
U.S. tensions are a concern. In recent months, the White House has barred shipments of key chip technology to China, adding to tariffs and other curbs on Chinese goods.
Meanwhile, China has rolled back Covid restrictions significantly. With an end to lockdowns and other severe controls, a massive wave of infections took hold. But investors are looking beyond to brighter days ahead. With China New Year holidays out of the way, will the Chinese economy finally rebound?
While the current top China stocks to buy or watch are dominated by e-commerce plays, don’t forget EV startups such as Nio (NIO) and Li Auto (LI). Like global giant BYD (BYDDF), all are taking on Tesla (TSLA) in the world’s largest EV market.
Tencent, NetEase and search-and-AI specialist Baidu (BIDU) are other internet giants to follow.
Top Chinese Stocks To Buy Or Watch
| Company | Ticker | Industry Group | Composite Rating |
|---|---|---|---|
| Tencent Holdings | TCEHY | Internet-Content | N.A. |
| Trip.com | TCOM | Leisure-Travel booking | 98 |
| Baidu | Baidu | Internet-Content | 89 |
| NetEase | NTES | Computer Software-Gaming | 84 |
| PDD Holdings | PDD | Retail-Internet | 99 |
Tencent Stock
Tencent is China’s messaging and gaming giant, with major payments exposure and with key holdings in an array of Chinese companies, including JD.com.
Earnings have declined for the past four quarters, and revenue for the past two, as a big crackdown on internet platforms and new mobile games took a toll. Earnings growth is expected to return in 2023.
Q4 2022 results are due March 22.
Shares hit 52.88 on Jan. 27 and pulled back. TECHY stock is currently below its 50-day line..
Tencent stock is listed in Hong Kong and trades over the counter in the U.S.
Bottom line: Tencent stock is not a buy.
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Trip.com Stock
Trip.com is a Chinese online travel firm, with operations in various countries.
It’s one of the biggest beneficiaries of China’s reopening, with millions of people eager to travel within China and beyond.
Trip.com earnings rose 38% vs. a year earlier, defying views for a loss. Revenue fell 1%, also topping views. The company was bullish on travel, with analysts expected hot growth in 2023-2024.
Trip.com stock more than doubled from the October low of 19.25 to the Jan. 27 peak of 40.17.
A new flat base has formed with a 40.27 buy point. Shares are just belowtheir 50-day line.
Bottom line: TCOM stock isn’t a buy.
Tesla Vs. BYD: Which EV Giant Is The Better Buy?
Baidu Stock
China’s search giant is aggressively expanding in artificial intelligence and self-driving. On March 16, Baidu unveiled its Ernie chatbot. On May 17, Baidu got the first-ever license to offer fully autonomous ride-hailing service in Beijing, with no safety driver.
Baidu’s joint venture with auto giant Geely will release a self-driving car later this year.
Baidu earnings rose 21% in Q4, following a 4% gain in Q3 and a 1% dip in Q2. Revenue has fallen vs. year earlier for three straight quarters.
Baidu stock more than doubled from its October low to its Feb. 7 high of 160.88. Shares have consolidated, forging a new base with a 160.98 buy point.
BIDU stock rebounded from its 200-day line on Thursday, then gapped above its 50-day on Friday. Shares could be seen as actionable now, or they could wait for down-sloping trendline entry.
Bottom line: BIDU stock is not a buy.
Pinduoduo Stock
PDD Holdings, the parent company of Pinduoduo, is the No. 3 e-commerce player in China, after Alibaba and JD.com. But it’s outperformed its larger rivals in recent months, with its bargain focus appealing to consumers in a tough economy.
PDD Holdings is expanding overseas, splashing out on a Super Bowl ad to tout its U.S. e-commerce site Temu, which is gaining steam.
Sales growth has accelerated for the past three quarters, from 5% to 50%. PDD earnings spiked 256% in Q3.
Q4 results are due before Monday’s open.
PDD stock peaked at 212.60 in February 2021 then crashed to 23.21 on March 15, 2022. But since then, Pinduoduo stock has trended higher, in a volatile fashion.
PDD stock gapped out of a 47%-deep base on Nov. 28 following earnings. Shares kept running higher before pulling back in late January.
PDD has a new consolidation with 107.48 buy point. Shares are just below their 50-day line. A bullish move above Thursday’s high of 95.31 would offer an early entry.
One concern is that PDD stock has performed much better vs. larger rivals Alibaba (BABA) and JD.com (JD).
Bottom line: PDD stock is not a buy.
NetEase Stock
NetEase is a China mobile gaming giant.
Q4 EPS fell 32% vs. a year earlier, while revenue dipped 4%.
After running from 53.09 in late October to 93.19 in late January, NTES stock has forged an 18%-deep consolidation, mostly above the 50-day and 200-day lines. Shares are between those two moving averages. A decisive move above the 50-day line would also break a trendline, offering an early entry.
Bottom line: NTES stock is not a buy.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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