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How to Protect your Wealth by Investing in AI Tech Stocks

Alibaba - BABA 9988 Stock Price Analysis Forecast 2023

Companies / China Stocks Jan 11, 2023 - 09:01 PM GMT

By: Nadeem_Walayat

Companies

Ai Stocks Portfolio

A quick look at the current state of my portfolio which is now 88.5% invested after arrival of approx 5% of fresh cash and after I sold all of my NBIX holding given that it earlier retreated from a multi year high, and that it tends to trade within a range of $125 to $76. I have update the table to indicate when columns were last updated. I have also replaced the beta column with something more useful called Future Growth (1-10), which is basically how I see the COMPANY doing in terms of future growth potential where 10 is the highest and 1 is the lowest, note this does not mean that the stock prices will match growth potential due to a myriad of factors such as sentiment, valuation and politics, but it gives insight into the underlying prospects for the businesses where the two stocks that score 10 are AMD and TSMC which is why I am heavily invested in both and don't fret about stock price drops in either as recently experienced because the underlying businesses have huge long-term future growth potential. Stocks that score 9 are Nvidia, Facebook, ASML and IBM, which again means I am not too phased by what we recently witnessed with the likes of META and and Nvidia, stock prices rarely reflect the actual state of the underlying business as they oscillate between extreme fear and extreme FOMO as illustrated when one watches the Cartoon Network (CNBC).


Table Big Image - https://www.marketoracle.co.uk/images/2022/Nov/AI-stocks-portfolio-25th.jpg

Alibaba - BABA 9988 $80.50, EGF 18%, 2% P/E 11

If you thought holding Tencent was painful that's nothing compared to BABA draw down pain. BABA a clone of Amazon a year ago trading at 1/3rd the valuation of Amazon on a P/E of 22. It was a GOOD buy, what could go wrong? CCP! Jack Mae opened his big mouth and we all paid the price! CCP are control freaks and Crushed all of the Chinese Tek giants to send a message of who is in charge. There is a limit to what investors can perceive in terms of future prospects especially for corporations operating in a foreign land and given where we were at the time I don't see how I could have done anything different other than to start accumulating BABA at $200.

The stock price has been crushed like a bug in the rug down 75% from it's high, and 62% from when it started to perk my interest at $200. The stock chart looks BAD, There are so many underwater investors (me included) who will be eager to sell on any significant rally that it's going take years to recover. There is a good chance that $58 was the capitulation low. After all it is now trading on a PE of 11 vs 22 a year ago so the drop in the stock price is a valuation reset rather than fundamental to the stock. And EGF's point to earnings growth ahead which implies that BABA 'should' have bottomed, it's less than half the price of a year ago, and near half the valuation with EGF pointing to earnings growth. I am actually tempted to add a little more, a sucker for punishment but unless the CCP wants China to turn full blown communist again, which could happen, I am tempted to up the ante but I would also heavily trim my holdings as the stock price rises to above $120. My average price paid stands at $151 (helped by sterling's bear market), 119% invested. As long as there is earnings growth as implied by EGF then BABA can return from the dead but it will take time.

(Charts courtesy of stockcharts.com)

The bottom line is that fundamentally BABA looks good! Though again we are playing with the Chinese fire breathing Dragon here so could get burned, definitely high risk but I am completely at ZEN with my holding as it's already done the worst it could do by falling to $58, so as Clint Eastwood would say Go ahead punk make my day! The first stage for Baba is to build a base between $90 and $70, the second stage will be to break above $120 which could take several years. Following which BABA will have entered a new bull market that over the course of another couple of years could be trading at new all time highs. So I consider BABA a good long-term play, earnings growth plus cheap valuations the only variable that could damage BABA is sat on the Imperial throne.

This article is an excerpt form my recent analysis on the current state of the embryonic stocks bull market Stocks Analysis Bonanza - GOOG, QCOM, ASML, TCHEY, BABA, BIDU, TSLA, WDC, RBLX, MGNI, COIN, BITCOIN CAPITULATION! that was was first made available to patrons who support my work.So for immediate first access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $4 per month. https://www.patreon.com/Nadeem_Walayat. Lock it in now as $4 per month as this rises to $5 per month in th new year.

Also access to my extensive analysis that concludes in detailed stock market trend forecast into the end of 2023 Stocks Bear Market Max PAIN - Trend Forecast Analysis to Dec 2023 - Part1

Most recent analysis includes -

So for immediate first access to to all of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $4 per month. https://www.patreon.com/Nadeem_Walayat.

My Main Analysis Schedule:

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Again for immediate access to all my work do consider becoming a Patron by supporting my work for just $4 per month. https://www.patreon.com/Nadeem_Walayat. Lock in now as this increases to $5 per month in the new year.

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Your mega-trend investing analyst.

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2022 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Housing Markets Forecast 2014-2018The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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