Buy This, Not That: Put These Controversial Stocks on Your “Buy” List

Shah Gilani|July 10, 2024

I’m going to get straight to the point.

I have a handful of stocks to show you today that are quite controversial… but they are all BUYs.

Because it doesn’t matter what they do or where they do it. Are they making money?

And these five polarizing titans are.

So set aside your reservations and take a look at what I for you today.

It’s all in my latest Buy This, Not That video.

Click here or on the thumbnail below to dive in.

TRANSCRIPT

Hey, everybody. Shah Gilani here with your weekly BTNT, as in Buy This, Not That.

This week, I’m going to hit the big Chinese stocks…

Now, for all of you haters out there who say, “I would never buy Chinese stocks” for this reason or that reason, I get it.

But what you don’t get is it’s about making money.

It’s not about what you like or don’t like. You can certainly stand your ground on what you believe in and not invest in a company that does something you don’t like or because it’s domiciled somewhere you don’t like, that’s certainly your prerogative.

My prerogative is to make money. And everything that matters to me when it comes to stocks is not where they’re domiciled, but what they do and how they make money. And how I can make money from them.

That’s what matters.

So keeping what matters in sight, I’m going to hit the Chinese stocks.

Now, the thing that does matter right now with Chinese stocks is tariffs.

We’re in an election year. I think the Biden administration is going to continue to push back on China. We know that if Donald Trump gets in, he’s going to push back on China.

And the European Union is also pushing hard on China as far as imports of EVs, as far as imports of other products and raw materials… the things that are coming from China into Europe that the Chinese are likely – definitely – subsidizing.

The European Union’s going to push for some tariffs on stuff that’s subsidized by the Chinese government. I get that. The U.S., the same thing. But we’re not there yet.

We’re not at the point where the tariffs are so devastating to Chinese companies that they’re not investable.

We may get there. That’s why you have stops in place.

So let’s talk about the big Chinese players. And I’m going to reveal what I think up front.

They’re all BUYs, and I’ll tell you why.

First up is Tencent (TCEHY). Tencent is the largest-cap company in China. It’s a BUY.

It’s trading around $48. It’s a BUY with a 10% to 15% stop, which is going to be true for pretty much all of the stocks I’m going to cover today.

They’re BUYs with 10% to 15% stop because risk/reward wise, 15% is enough to give these stocks room to move. And if they drop 15%, you get out with a 15% loss, which is completely manageable.

And the reason you’re getting out is probably the tariffs are going to get bad and things are going to get worse between the U.S. and China, the European Union and China.

Then you just want to be out and see where things go.

But in the meantime, things could get better, and these companies are making money.

Tencent Holdings’ quarterly revenue growth year over year is 0.3%. I don’t like that. The quarterly earnings growth year over year is 62%.

This is a gigantic company doing really well. Online advertising, fintech, business services, gaming, entertainment, cloud services, big data analytics.

Tencent Holdings is the bomb. It has a profit margin of 21%.

TCEHY is a BUY with a 15%. Give it a shot.

Next up, Baidu (BIDU). Wow.

Baidu is the Google of China. You think Google makes money? Of course, they do.

Baidu, of course, makes money. Its profit margin is 15%. But it has slow revenue growth and earnings growth… if not a bit in molasses right now.

But it’s cheap. The stock is cheap. Baidu trades around $98 and it has just a little shy of a 13% trailing P/E. That’s pretty cheap.

On a forward basis, the P/E is less than 10. So I like Baidu here. I think it’s cheap at $98 and change. Buy it with a 15% stop because it’s the Google of China.

Next up, Alibaba (BABA).

It’s the Amazon of China. Amazon’s a great company. So is [BABA]. It’s a BUY down here because it’s an opportunity at around $76.

If [BABA] gets above $90, it’s going $150. So at $76, that would be a double. So I like [BABA] down here. It’s worth it with a 15% stop, people.

Its profit margin is 8.5%. Revenue growth, year over year, is 6.6%.

The stock is hampered by earnings growth that has been in the doldrums, but that can turn around. But down here, it looks cheap. It’s worth a buy in here with a 15% stop.

Again, give it a shot.

Next up is PDD Holdings (PDD). Now, you probably know this as Pinduoduo, the ecom giant. They sell everything from ag products to food and beverage.

They also own Temu. Temu’s getting hot in the U.S. I have a lot of friends who buy stuff on Temu. I haven’t yet, but people are raving about it.

A friend of mine had a pair of really cool-looking sneakers he got for less than $10 on Temu.

PDD is trading extremely low at about $139. You want to buy PDD.

It has a 24% profit margin. It sells a ton of stuff.

Quarterly revenue growth year over year is 130%. Quarterly earnings growth year over year is 245%.

You want to buy PDD with 15% stop.

The trailing P/E, by the way, is 18. The forward P/E, 12.

You have to buy a stock like this. I don’t care if you hate Chinese companies. This is a great company, and it’s making a ton of money.

Last but not least is JD.com (JD). It’s another big Chinese company, and it sells computers, computer electronics, home appliances, general merchandise, and cosmetics to baby products.

It has a thin profit margin of 2.27%. But the quarterly revenue growth is pretty decent year over year at 7%. Quarterly earnings growth is also pretty decent year over year at about 14%.

The stock is trading around $26, but I think it can get down to $24.

If you want to buy it at $24, it’s a good idea. If it goes lower, I would buy more at $21, $20, and I think this is a company worth holding for a bit. Again, have a stop in there, and ladder it down a little bit. Just make sure you put a stop in there because if things get bad, they could get really bad for Chinese stocks.

In that case, I’d be looking to buy them a lot lower. But I don’t know that we’re going to get that.

So these are all a BUY if things don’t get bad for Chinese stocks.

That’s it for this week. I’ll catch you guys next week. Cheers. Don’t be haters.