Diversification is often the right answer, but it is particularly important these days, given the uncertainty in the U.S. economy, the overvalued U.S. stock market, and the generally muted predictions for U.S. stocks this year.
Further, value stocks – both domestic and international — have been outperforming growth so far this year and that trend is expected to continue throughout 2025.
It is what many portfolio managers and experts are calling a stock pickers market, because of the uncertainty with indexes.
If you are looking to diversify, international value stocks are a particularly good place to be and one of the top options right now is JD.com (NASDAQ:).
JD.com is a Chinese ecommerce company whose business model is similar to Amazon.com Inc (NASDAQ:) in that it is a platform for retailers to sell directly to consumers. Some call it the Amazon of China. It is smaller than Amazon, and Alibaba (NYSE:), for that matter, in terms of market cap. But its business model is closer to Amazon’s while Alibaba’s is more like eBay’s, connecting buyers to sellers.
In fact, JD.com has a direct connection to Amazon. This past November, the company signed a deal with Amazon to launch an Amazon store on JD.com, giving Chinese customers access to Amazon’s products.
JD.com stock has been a strong performer over the past year, returning some 72%. It is already up 17% year-to-date and is trading at around $40 per share.
In the most recent quarter that ended September 30, the company generated $37.1 billion in revenue, up 5% year over year. Net income rose a robust 48% year over year to $1.7 billion. Net income per ADS was $1.10 per share, up 55% from the same quarter a year ago.
One of the first things to know about JD.com is that it caters almost exclusively to the Chinese market. So, any tariffs that the Trump Administration might impose on China would have minimal impact compared to some of its competitors, which sell in U.S. markets.
Also, JD.com has been a beneficiary of the Chinese government’s recent stimulus programs to lift the Chinese economy. One of them is the trade-in policy, which encourages consumers to trade-in old products, including cars, appliances, real estate, electronics and other products, to boost consumption and grow the economy.
“During the quarter, we were able to play an important role in China’s trade-in program, thanks to our leading supply chain capabilities and fulfillment infrastructure that we’ve built over the past two decades,” Sandy Xu, CEO of JD.com, said.
Analysts at Citi and JP Morgan recently put JD.com on their respective “positive catalyst” watch lists, citing the continued benefits from the trade-in policy.
Alicia Yap, an analyst at Citi, said the ability of JD.com to leverage the trade-in policy “might have been underappreciated by investors,” according to Nasdaq. Plus, she added, its early mover status in the trade-in initiative should provide more of a boost and lead to revenue growth in 2025. Citi set a price target of $51 per share.
JP Morgan analysts also cited the strength of JD.com’s trade-in program, along with its solid margins and investment discipline. JP Morgan estimates 9.5% revenue growth and 13% profit growth in 2025, with a price target of $50 per share, reported Stock Twits.
A good value
The price targets for Citi and JP Morgan are roughly in line with the rest of the 45 analysts that cover JD.com. The median price target among that group is about $50 per share, which would represent a 25% price gain over the next 12 months.
Along with its catalysts, a big part of the appeal of JD.com is its valuation. Even with the strong performance over the past year, JD.com stock is still undervalued by investors.
JD.com stock has a P/E of 13 and a forward P/E of just 9, which would put it in value stock territory. JD.com stock also has a low 5-year P/E-to-growth (PEG) ratio of 1.27 and a low price-to-sales ratio of 0.41. All of these metrics indicate a stock that is undervalued by the market, both in the short and long terms.
This makes JD.com an excellent value stock with its low valuation and solid catalysts. It would be a stock to consider in a diversified portfolio.
#International #Stock #Buy
