A prime pick for the 2025 market rebound

This is the end of the 2024 business year. Now that investor attention — and capital — is turning to 2025, some resources can be useful for identifying the best ideas and trends to invest in in the coming months. One of those sources is the Barron’s Top Stocks for 2025 list, which is released at the end of each year and is followed by many on average for their accuracy in picking good companies to hold over the next 12 months.

Today’s list includes a name that has been the center of some controversy lately. As part of foreign stocks in China, this is not a company that has inspired much comfort among investors. However, this is where a true value investor finds his best ideas: when no one else is willing to do the homework because everyone else seems against the idea.

They are found in stocks, or for that matter opportunity Technology field huge Alibaba Group NYSE: BABAAnd it’s not just Barron’s that liked the stock enough to express its bullish view on it.

Many analysts on Wall Street are also raising their ratings and valuations for Alibaba stock, not to mention various institutional investors nearing the stock’s lows.

Here are a few reasons why Barron’s decided to pick Alibaba this year.

China’s economy calls for stock buyers

One is major Diversification in Asia’s bond markets. Today, yields would make China’s economy the best risk-to-reward ratio in the region. Yields on a 30-year bond basis have fallen below Japan, meaning markets are now pricing in lower risk and volatility in China than in Japan.

Then the fact is that iShares MSCI China ETF Nasdaq: MCHI Makes an offer Dividend yield up to 2.5%, That’s above the current yield on Chinese ten-year bonds of 1.7%. In another market, when stocks offer a higher yield than the country’s ten-year bond, buying usually occurs.

Well, that hasn’t happened for the most part in China, and that should tell investors that this is a fear-fueled market where they can follow Warren Buffett’s advice and “get greedy when others are fearful.” On the other hand, some mega-investors have been quietly building large positions before Alibaba became very popular.

Institutional capital goes to Alibaba stock

In the last few quarters, investors like Michael Burry and David TepperManaging billions in capital for his hedge funds, making Alibaba stock one of his largest positions in his respective portfolios. Then, even George Soros, who was reluctant to take foreign stock positions, launched a multi-million dollar investment in Alibaba.

However, these investors were not alone, as allocators at Sanders Capital decided to increase their Alibaba stock holdings by 0.3% through November 2024. This may not seem like much on a percentage basis, but it brought their net position to a higher level. $1.9 billion todaymaking them among the largest institutional shareholders in Alibaba.

What are these buyers looking for in a company that most of Main Street is just missing out on? Well, this is where retail investors can start taking into account the analyst’s thoughts and feelings. Today’s price target on Alibaba stock, the Wall Street consensus, stands at $114.1 per share, which calls for an upside of 35.3% from today’s prices.

However, some are willing to stand out from the pack and give Alibaba a more reasonable valuation based on its recent price action, such as Barclays. These analysts put an overweight rating on Alibaba stock through November 2024, valuing the company at $130 per share to indicate a huge rally of 54.2% from today’s price.

The targets set by Macquarie are even more aggressive from October 2024, where their improved performance comes with rankings. $145 a share price. To prove these analysts right, Alibaba stock would have to rally 72% to give investors a head start in 2025.

As ambitious as these goals are, they still don’t reflect the bigger picture. Analysts thought Alibaba stock was worth $246 per share in 2021, and judging by the company’s financials, that valuation should never have gone up in the first place.

Knowing that the stock is cheap today, especially since its price-to-earnings ratio (P/E) falls well below 17.1x. Average valuation of the retail sector 108.9x, the management of Alibaba decided Allocate up to 25 billion dollars For share buyback program of the company. This is a vote of confidence in the company’s future valuation that investors should not ignore.

Before you consider Alibaba Group, you may want to hear this.

MarketBeat keeps track of Wall Street’s top-rated and best-performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified Five stocks That top analysts are quietly telling their clients to buy now before the broader market hits… and Alibaba Group was not on the list.

Although Alibaba Group currently has a “moderate buy” rating among analysts, top analysts believe these five stocks are better buys.

Check out five stocks here

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