HomeBusinessBuying these tech stocks could be like buying metaplatforms in 2022

Buying these tech stocks could be like buying metaplatforms in 2022

If you purchased shares of Metaplatforms By the end of 2022, you could have more than doubled, and possibly even tripled, your investment. Buying a solid stock when the markets are overly bearish about it can prove to be an excellent move in the long run. In Meta’s case, recovery happened incredibly quickly.

One stock that could have the potential to generate similar returns is Alibaba Group Holding (NYSE: BABA). Technology stocks have struggled in recent years as investors have grown concerned about the impact the Chinese government is having on the company: the company has a stake in more than a dozen of Alibaba’s entities.

While this is a risk that investors should not ignore, it is also difficult to underestimate Alibaba’s size and prominence in China’s technology and e-commerce markets and its attractive long-term growth prospects. Here’s a closer look at why this stock could be worth betting on today.

Alibaba’s businesses are diverse and more growth is on the horizon

A major concern about Alibaba’s business lately has been its lack of growth. There is an increase in competition in the Chinese e-commerce market due to the rise of shopping platform Temu PDD companies owns, has put pressure on retailers around the world competing with their low-priced items. But even amid these challenges, Alibaba’s business has been quite resilient.

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In the company’s most recent earnings report, covering the last three months of 2023, revenue from online shopping platforms Taobao and Tmall rose 2%. And while e-commerce is Alibaba’s core business, the company’s overall businesses are diverse, making this a great investment.

For example, Alibaba’s cloud intelligence group accounts for more than 10% of segment revenue, and Cainiao Smart Logistics Network isn’t far behind, with a share of just under 9% of revenue last quarter.

Although Alibaba has faced headwinds due to a slowing Chinese economy, there is still a lot of growth potential ahead. Alibaba co-founder Joe Tsai believes the level of e-commerce penetration in China will grow to more than 40% in the next five years; currently this is around 30%.

Alibaba has the advantage of already being a large, established player in the Chinese e-commerce market, putting it in a prime position to benefit from more growth in the sector.

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The stock’s valuation is incredibly attractive

In 2022, amid a sharp sell-off, Meta’s shares fell so much that at one point the price-to-earnings (P/E) ratio was barely above 8. Today, the stock trades at more than 32 times its earnings. However, Alibaba shares remain discounted, with a price-to-earnings ratio of just under 14. Over the past twelve months, Alibaba shares are down 15% and it’s possible the shares could fall even further depending on how relations between China and American progress and how strong the Chinese market is proving to be.

Investors are getting the shares at a discount because of these unknowns and the geopolitical risk that comes with an investment in Alibaba. But for such a major technology player in the international and Chinese e-commerce markets, there is a lot of value here.

Should You Invest in Alibaba Stock?

Alibaba seems like a great buy at its current valuation and has the potential to be one of the better growth stocks you can buy right now. The Chinese market isn’t done growing yet, and while the Chinese government’s influence on the company is concerning, it shouldn’t be enough of a concern to deter long-term investors.

The potential upside for Alibaba stock could be significant. In 2020, the price traded around $200, and in the long run, it wouldn’t be surprising if the price returned to that level.

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Should You Invest $1,000 in Alibaba Group Now?

Consider the following before buying shares in Alibaba Group:

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Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Mark Zuckerberg, CEO of Meta Platforms, is a member of The Motley Fool’s board of directors. David Jagielski has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Meta Platforms. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.

Buying These Tech Stocks Could Be Like Buying Metaplatforms in 2022 Originally published by The Motley Fool

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