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The 2024 trading year ends. Now that investors’ attention – and capital – is focused on 2025, some resources may be helpful in identifying the best ideas and trends for investing in the coming months. One such resource is Barron’s list of the best stocks for 2025, which is published every year end and is followed by many on average for its accuracy in picking good companies to hold over the next 12 months.

Today’s list includes a name that has recently become the center of controversy. Being part of the foreign stocks in China, this company does not provide 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 too against the idea.

Alibaba group today

$85.52 +0.38 (+0.45%)

(As of 5:19 p.m. ET)

52 week range

$66.63

▼

$117.82

Dividend yield

1.15%

P/E ratio

17.35

Target price

$114.07

This stock, or opportunity for that matter, lies with a tech giant. Alibaba Group New York Stock Exchange: BABYAnd not only Barron’s liked the stock so much that they expressed their optimistic view on this matter.

Some Wall Street analysts are also raising their ratings and estimates on Alibaba shares, not to mention various institutional investors who are surrounding the stock near its lows.

Here are a few reasons why Barron’s chose Alibaba this year.

China’s economy requires stock buyers

There are major divergences in the Asian bond market. Today’s returns will make China’s economy the best risk-reward ratio in the region. The 30-year yield has fallen below Japan’s, meaning markets are now pricing in less risk and volatility in China than in Japan.

iShares MSCI China ETF today

MCHI

iShares MSCI China ETF

$47.71 +0.42 (+0.89%)

(As of 5:19 p.m. ET)

52 week range

$35.58

▼

$59.78

Dividend yield

2.26%

Assets under management

$5.58 billion

Then there is the fact that iShares MSCI China ETF NASDAQ:MCHI offers a dividend yield of up to 2.5%, above China’s current 10-year bond yield of 1.7%. In any other market, when stocks offer higher yields than a country’s 10-year bonds, there is usually a buying spree.

Well, for the most part, China hasn’t, and that should tell investors that this is a fear-driven market where they can follow Warren Buffett’s advice: “Be greedy when others are fearful.” On the other hand, several large investors are quietly building up huge positions in Alibaba before it becomes too popular.

Institutional capital flows into Alibaba shares

Over the past few quarters, investors such as Michael Burry and David Tepper, who manage billions in their hedge fund capital, have made Alibaba shares their largest position in their portfolios. Then even George Soros, who was not too eager to take positions in foreign stocks, initiated multimillion-dollar investments in Alibaba.

However, these investors were not alone: ​​share allocators Sanders Capital decided to increase their Alibaba shares by 0.3% as of November 2024. In percentage terms, this may not seem like much of an achievement, but it did bring their net position to a high. Today they stand at $1.9 billion, making them one of Alibaba’s largest institutional shareholders.

What do these shoppers see in the company that much of Main Street seems to be missing? Well, this is where retail investors can start taking into account analyst opinions and sentiments. Today’s Wall Street consensus price target for Alibaba stock is $114.1 per share, suggesting upside potential of up to 35.3% from today’s prices.

However, some are willing to stand out from the crowd and give Alibaba a more reasonable valuation based on recent price action, such as Barclays. As of November 2024, these analysts maintained an Overweight rating on Alibaba shares, valuing the company at $130 per share, implying much higher upside to 54.2% from today’s price.

Even more aggressive are the targets Macquarie set in October 2024, when its outperform rating was combined with a stock valuation of $145 per share. To prove these analysts right, Alibaba shares would need to rise 72% to give investors a head start in 2025.

As bullish as these targets are, they still don’t reflect the bigger picture. Analysts believed Alibaba stock was worth as much as $246 per share in 2021, and based on the company’s financial reports, that valuation wasn’t expected to disappear at all.

Knowing that the stock is cheap today, especially given that its price/earnings ratio (P/E) of 17.1x is well below the retail sector average valuation of 108.9x, Alibaba management decided to allocate up to $25 billion to the company’s shares. buyback program. This is a vote of confidence in the company’s future valuation that investors should not ignore.

Before you consider Alibaba Group, you should hear this.

MarketBeat tracks Wall Street’s top-rated and best-performing analysts daily and the stocks they recommend to their clients. MarketBeat identified five stocks that top analysts were quietly telling their clients to buy now, before the broader market caught on… and Alibaba Group wasn’t on the list.

While Alibaba Group currently has a Moderate Buy rating among analysts, the top-rated analysts consider these five stocks to be Strong Buys.

View five stocks here

Want to avoid the hassle of mud, volatility and uncertainty? You’ll have to exit the market, and that’s not sustainable. So where should investors invest their money? Find out in this report.

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