Like many tech stocks in 2021, China’s JD.com (NASDAQ:JD) has seen its shares tumble since mid-February. After closing at $106.88 on Feb. 17, it is now trading in the $86 range, a drop of around 20%. That’s coming off a stellar 12 months that saw JD stock post 200% growth (before the tech sell-off), and an impressive earnings report last week that showed the company is firing on all cylinders. Eventually, the market is going to come around, and when it does, JD.com shares are going to be back in growth mode.
JD stock earns a “B” grade in Portfolio Grader. This is an e-commerce company that is adding new users at a rapid pace, in a country that was first to recover from the pandemic and seeing consumer spending ramp up in 2021.
JD.com Reports Solid Earnings
On Mar. 11, JD.com reported its fourth-quarter and full-year 2020 earnings. Net revenue for Q4 was $34.4 billion, up 31.4% year-over year. Earnings per share (EPS) for the quarter was 23 cents, up 187.5% YoY. Revenue and earnings both beat Wall Street expectations, by the way. Full-year revenue of $114.3 billion was up 29.3% over 2019. Net active user accounts grew 30.3% in 2020, hitting 471.9 million.
The company announced it is continuing to build out its fulfillment logistics. By the end of 2020, it was operating more than 900 warehouses, with a combined floorspace of 21 million square meters. As its warehouse network and capacity increase, JD.com is able to reach more of China’s vast territory, increasing its consumer base.
You would expect that the numbers reported by JD.com would have lit a fire under JD stock. Especially when you consider this is an e-commerce company that grew its active user base by nearly one third in a single year, and the Chinese economy is expected to boom this year — with consumer spending already going through the roof in January and February. Instead, the opposite happened.
In the first day of trading after the earnings report, shares dropped 6.6% to hit a 2021 low. It’s since put together a few days of modest gains, but still remains far off its mid-February high.
There may be concerns that the growth in JD stock in 2020 has already priced-in the online retail boom expected in 2021.
However, as a Chinese stock, there may also be ongoing worries about the potential delisting of JD.com. That’s a valid concern. However, the worst case scenario doesn’t see that happening until three years from now. A lot can happen between now and then, and even if the company eventually fails to comply with U.S. regulations, there will be plenty of time for investors to react.
Bottom Line on JD Stock
The concern that delisting might eventually need to be dealt with is not preventing investment analysts from recommending JD stock. CNN Money is tracking 43 analysts, and they have JD.com rated as a consensus buy. Their median 12-month target price of $111.10 has nearly 30% upside. Perhaps most telling of all, the most bearish of the group has a $90 price target. When the analyst who is the most doubtful about a stock still has a price target with 5% upside, that’s a pretty strong indictor of an opportunity.
I included JD.com in my list of “8 Stocks to Buy for March,” and that was before the company reported its stellar Q4 and full-year 2020 earnings.
JD stock has staged a small rally since the initial reaction to its earnings report. If you’re interested in adding this growth stock to your portfolio, the time to move might be now. Odds are, this stock is on its way up.
— Louis Navellier and the InvestorPlace Research StaffAmerica's #1 Stock Picker: BUY "AMZN of Houses" [sponsor]
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Source: Investor Place