AliBaba (BABA)
Entry: Unlock
Price target: 134.00-138.00
Second PT: Unlock
Risk appetite is growing fast, but valuations are growing even faster, making undervalued stocks harder to come by, but there’s a space that’s still lagging far behind the market rally and it may catch up soon as rates come down and political tensions are relieved. The space in focus? None other than China, which offers us phenomenal companies like AliBaba, JD, Full Truck Alliance, Tencent Music…etc. We’ve covered these names in our past analyses and they have served us well. Now it may be time to take a second look as valuations diverge from the general market.
For this week, we’ve decided to cover AliBaba, but other names are also emerging as possibilities. AliBaba stands out because of their diverse revenue streams, which have allowed them to reach $138 billion in sales last year. The Chinese tech giant offers e-commerce platforms, cloud computing, digital payments, and logistics services. They’re also pushing heavily into artificial intelligence, AliBaba announced a three year commitment to AI and cloud infrastructure worth $53 billion. And the company is laughing AI foundation models and applications to power tools and supporting a rapidly growing developer ecosystem. Moreover, the company quoted up to 30% efficiency gains in partner business due to the integration of AI across e-commerce, logistics, cloud, fintech, and consumer services.
Back to valuation:
Looking at its financials, we see that AliBaba is severely undervalued compared to peers in the industry. The company’s forward P/E ratio is 11x, less than half the sector average and a third of the S&P 500’s P/E of 29-30x. The low valuation can be attributed to overall uncertainty between China and the U.S., stemmed by the possibility of delisting Chinese companies. But these uncertainties have been ongoing since Trump’s first term in office and none actually became a reality. If anything, the two countries are moving forward with deals on trade and on TikTok.
What are investors waiting for?
Although the companies haven’t been delisted, it doesn’t mean the risks are completely eliminated. After all, U.S. investors usually trust U.S. companies more than others, and they need monetary policy to shift in their favor to increase exposure to the higher risk names. Considering there is now a 97% chance of an interests rate cut in September and another by end of year, this is a good time to consider the “higher risk” names. AliBaba, by company performance is not high risk, but being a Chinese stock places in them in that category.
Alibaba’s $282 billion market cap looks compelling given its nearly $140 billion in growing revenue, strong profit margins, and $150 billion in positive equity. At today’s price, it stands out as a clear opportunity.
Please note that this may take longer than one week to come around to targets and we may change our entry / exit levels if necessary. We'll be updating the stock as needed for our Hyper Stocks Pro members. Wanna see real-time market updates? Learn more here.
Roku (ROKU)
Entry: Unlock
Price target: 107.00-110.00
Second PT: Unlock
Despite pushback from many traders, we have remained bullish on Roku over the past 12 months, largely because it still controls 39% of the connected TV (CTV) market share. A recent partnership with Amazon now gives the two companies access to advertise to 80 million CTV households, representing 80% of U.S. based CTV. In an era where streaming advertising is gold, this partnership supercharges their ability to reach audiences more efficiently, enhancing the user experience and delivering stronger results for business partners.
Roku’s growth is not exponential, but it is steady. The company has grown revenue at a low double digit rate over the past three years, though profitability had lagged. That changed with its latest quarterly earnings report, where Roku posted its first profitable quarter since 2021. Shares initially fell on the announcement, but buyers quickly stepped in, and continuation looks highly probable.
Looking back, Roku didn’t really have bad years in terms of revenue, the stock was just a victim of the post 2020-2021 market correction. In 2021, Roku reached a market cap of $42 billion, which was extremely overvalued and was rightfully slashed by 75% in the years to follow. But now at a $13.9B valuation, Roku is starting to look like an attractive buy, especially as earnings grow.
Roku is not a “buy and forget” company, but it has been consistent enough to warrant attention. The stamp of approval from Amazon is likely to attract new investors, especially as the ad experience improves and financial strength grows. We believe this partnership is exactly what Roku needed to break out of its three year range.
Please note that this may take longer than one week to come around to targets and we may change our entry / exit levels if necessary. We'll be updating the stock as needed for our Hyper Stocks Pro members. Wanna see real-time market updates? Learn more here.
Oklo (OKLO)
Entry: Unlock
Price target: 80.00-85.00
Second PT: Unlock
There’s always a “hot new industry” on the market that pushes little-known names to record highs on the basis of excitement and projections. One such industry this year is nuclear, particularly small modular micro-reactors (SMRs), which the world is betting on to power AI data centers and defense projects. Oklo is among the names of the stocks seeing a push from the rising tide along with others like SMR and NNE. Although pre-revenue, these companies have surged on hopes that their technology will be used to power the world’s rising energy needs.
Oklo’s flagship project, the Aurora reactor is slated for Idaho National Lab in 2027–2028, while another project at Eielson Air Force Base could open the door to broader Department of Defense adoption. Although Oklo is still pre-revenue with quarterly losses of ~$25M, it maintains over $600M in cash, giving it a runway to execute and continue research and development spending. However investors must stay cautious as the stock’s future heavily depends on their ability to execute, more importantly, to survive long enough to establish something useful before they run out of cash. Competition is also fierce, especially from NuScale (SMR), which already has more Nuclear Regulatory Commissions approvals. We covered SMR earlier this year in May and it ran to both our price targets, reaching more than 100% returns.
Although Oklo’s stock has outpaced the growth of the other competitors in the space, it remains a top speculative name into the final stretch of the year. Excitement over nuclear, rising demand for energy, and optimism about its projects make it a contender for a continuation rally.
Oklo is NOT what we consider a “buy and forget” type stock. Although we’ve highlighted the company and its projects, the basis of our trade on this will largely be technical, meaning we’ll be managing based on price action. The stock is also subject to uncertainty, extra sensitive to catalysts such as competition news or project updates.
Please note that this may take longer than one week to come around to targets and we may change our entry / exit levels if necessary. We'll be updating the stock as needed for our Hyper Stocks Pro members. Wanna see real-time market updates? Learn more here.
Stock Name - Unlock
Entry: 29.00-30.00
Price target: 37.00-40.00
Second PT: 45.00-48.00
You've reached the end of our complimentary public watchlist. Unlock for the full list by becoming a member of our Hyper Stocks community. Click here to unlock more high probability set-ups!
Stock Name - Unlock
Entry: 12.50-13.00
Price target: 15.70-16.00
Second PT: 17.50-18.00
You've reached the end of our complimentary public watchlist. Unlock for the full list by becoming a member of our Hyper Stocks community. Click here to unlock more high probability set-ups!
Stock Name - Unlock
Entry: 12.50-13.00
Price target: 16.50-17.00
Second PT: 21.00-23.00
You've reached the end of our complimentary public watchlist. Unlock for the full list by becoming a member of our Hyper Stocks community. Click here to unlock more high probability set-ups!
Stock Name - Unlock
Entry: 44.00-46.00
Price target: 53.00-54.00
Second PT: 57.00-59.00
You've reached the end of our complimentary public watchlist. Unlock for the full list by becoming a member of our Hyper Stocks community. Click here to unlock more high probability set-ups!
___________________________________
The stocks posted above are the preliminary stocks and set ups we’ll be watching this week. All price points are subject to change based on market performance and sector health. Please do your own research and analysis on these companies/charts before taking on any set ups. This page and our services are for educational purposes only. This is not financial advice. Please consult with a professional for financial advice. Trade at your own risk and as always, good luck!
Disclaimer: This article is for informational and educational purposes only and does not constitute financial advice. Investing involves risk, including the possible loss of capital. Always do your own research or consult with a licensed financial advisor before making investment decisions.