Ain’t No Party Like an Alibaba Party…
’Cause an Alibaba party don’t stop.
Raising $25 billion on the New York Stock Exchange (NYSE) in 2014 wasn’t enough for Alibaba Group Holding Ltd. (NYSE: BABA).
BABA needs more bling.
Over the weekend, Bloomberg reported that Alibaba is working to raise $20 billion in a second listing in Hong Kong later this year. According to the report, Alibaba plans to use this new wad of cash to “diversify funding channels and boost liquidity.”
While Alibaba didn’t comment on the report, it certainly sounds like the Chinese e-commerce giant is stockpiling rations ahead of what could be a long cold war in U.S.-China trade relations.
First, if you’re a U.S. Alibaba investor … take a deep breath and relax. There’s no indication whatsoever that the company is planning on following Semiconductor Manufacturing International Corp. (NYSE: SMI) in delisting on the NYSE.
Second, this move is just the sentiment boost that BABA stock needs this year. Its shares plunged more than 26% since posting impressive earnings, driven lower by heated U.S.-China trade relations. And yet, despite a tough trade environment, Alibaba still saw earnings and revenue surge roughly 50% each in the first quarter [Note: Link to GS article].
Because of this, BABA stock is a bargain right now. This is the time to buy Alibaba.
The Good, the Bad and the Ugly
The Good: The Price-to-Stoner Ratio
There are few things more confusing than the cannabis market right now. It would almost be easier to walk into your local dispensary and make an informed choice:
Do you want the Northern Lights? The Purple Haze? Acapulco Gold? Or Blue Dream? Decisions … decisions.
Luckily for you, Banyan Hill cannabis expert Anthony Planas is on the case. Well … the investing case. You’re still on your own at the dispensary.
Anthony has developed a formula for evaluating value in the cannabis market. Riffing off the ideas behind existing market metrics like the price-to-earnings (P/E) ratio, Anthony came up with the world’s first enterprise-value-to-production ratio for the cannabis market.
Personally, I like the name price-to-stoner ratio better. But, if you want more on this revolutionary new way to weed out the best pot stocks, check out Anthony’s commentary and ranking of the top pot stocks here.
The Bad: The People’s Court
It looks like Apple Inc. (Nasdaq: AAPL) may escape the trade war with China by the skin of its teeth. The problem, however, isn’t tariffs on either side of the Pacific … it’s Apple’s appeal.
According to WedBush Securities: “We believe the more concerning issue is around any hit in demand if Apple feels the noise in China and any pro Huawei sentiment/Chinese nationalism negatively impacting sales.”
In short, Apple will be tried in the people’s court of opinion in China, and the consumer blowback could severely hurt demand.
The timing couldn’t be worse. The smartphone industry is praying for a turnaround with a 5G high-speed revolution, and Apple needs brand loyalty now more than ever. If that loyalty or image is undermined by the trade war, it could hurt Apple’s brand in China for years to come.
The Ugly: Is It Getting Cold in Here, or Is It Just Me?
It was another weekend of tit-for-tat between the U.S. and China. And it was nowhere near as exciting as the image that goes with this blurb.
While on a state visit in Japan, President Trump said: “I think (Chinese officials) probably wish they made the deal that they had on the table before they tried to renegotiate it.” Trump also stated that Chinese tariffs “could go up very, very substantially, very easily.”
Meanwhile, Chinese commentary in state news agency Xinhua implied that U.S. trade requests to address economic issues in China were an infringement of “core interests.” This was the equivalent of throwing down the gauntlet, as China has only used the “core interests” term with territorial claims, like Taiwan.
Unfortunately, not all disputes are settled with a “walk off,” Zoolander style. Choose your investments wisely [Note: Link to 10X promo].
The beginning and the end of the first Cold War were some of the best times to be invested in the stock market. As the U.S. and the USSR began their faceoff, they poured billions into research that boosted their economies. In the first full decade of the Cold War, the S&P 500 gained an average of 19.5% per year. In the final decade of the conflict, as Reagan ramped up spending to end the Cold War, the S&P 500 delivered average returns of 18% a year.
In the next Cold War, the spending will be focused on artificial intelligence, faster computers and other technologies that directly benefit consumers, so the gains could be even bigger for the economy.
— Michael Carr, Editor of Peak Velocity Trader [Note: link to VEL promo] and Precision Profits [Note: link to CTA promo].
It’s nice to see a take on the new Cold War that isn’t all doom and gloom. I could go for an 18% to 19% annual gain for the next decade. How about you?
It’s Gonna Be Huuuge, Believe Me
The sky is falling! The sky is falling!
Your take on the market right now depends quite a bit on which commentary you’re reading. If you’re reading headlines from the major financial news outlets, you’re getting a lot of “the sky is falling” rhetoric right now.
True, there’s quite a bit of uncertainty and volatility in the market. But that doesn’t mean it’s time to sell everything, hole up in a cabin in the woods and stuff your money in your mattress. (I’m looking at you, Uncle Bob. We know where you are. You’re not fooling anyone!)
Once again, Banyan Hill’s eternal optimist, Paul Mampilly, is spreading the good news.
This week, the editor of Profits Unlimited [Note: link to PRL promo] has the skinny on Tesla Inc. (Nasdaq: TSLA), the semiconductor rebound and the key stocks to watch for when the U.S.-China trade war eventually comes to an end.
What goes down must come back up, and Paul has three huge profit trades for you in this week’s video:
Until next time, good trading!