Investors know that Amazon (NASDAQ:AMZN) is hot. They continue to expand into new markets and consistently grow earnings for shareholders. But one thing that holds back some investors, especially small time investors is the stock price. At over $1,000 per share, it just isn’t possible for some investors to get a nice stake in the company. But there is hope and it is called Alibaba (NYSE:BABA).
Alibaba is the Amazon of China and in many ways, is ahead of them in terms of offerings. And the good news for small investors, its stock price is not out of reach.
Today I am going to show you why I feel Alibaba is a smarter investment than Amazon.
Who Is Alibaba?
As I mentioned, Alibaba is the Amazon of China. In addition to being an online retailer, Alibaba also offers other things as well. For example, they offer online storefronts for agricultural products. They also offer other services as well, including:
- travel services
- cloud computing
- electronic payment service
- shopping search engine
- online distribution service
All told, Alibaba is a dominate player in China. And while China is its main market, it has operations in over 200 countries.
Why The Future Is Amazing For Alibaba
To understand why the future is so bright for this company, you have to look at the economy in China. To begin, China has an emerging middle class. As their economy continues to grow, more and more citizens are entering the middle class.
This will provide a major boost to the economy of China. It is akin to the boom that the United States experienced in the 1950’s.
Related to this is access to the internet. Currently, roughly half of China has access to the internet. And with China having the largest population in the world, this means that there are many people who are yet to experience all that Alibaba has to offer.
Earnings
When it comes to earnings, Alibaba is rock solid. In their most recent earnings report, they reported earnings per share of $1.29 which beat estimates by $0.26. Revenues came in at $8.29 billion, an increase of 61%.
Since their second quarter earnings report in 2016, the company has been growing revenues by 50% or more.
Year to date, the stock price is up over 100% and trading at $190 per share. While a stock that trades at close to $200 a share looks expensive, remember that Amazon is trading well over $1,000 per share.
Why You Need To Invest In Alibaba
Here are the many reasons that make Alibaba such a powerful stock to own.
- The middle class in China is growing at a rapid pace
- Internet access in China also growing quickly
- Alibaba is diversified across many sectors
- The company is growing revenues at a torrid pace
All of these things lead me to believe that Alibaba is the better investment when compared to Amazon. With Amazon, it is going to cost them a lot of cash to enter into new markets. And while they are the king of commerce, brick and mortar stores aren’t dead yet.
Add to this, the fierce fight Walmart (NYSE:WMT) is putting up against Amazon is going to have an impact on their growth.
So why pay more than $1,000 for a share of a company that has a tougher road ahead of them when you could pay less than $200 a share and get a solid company that has an incredible opportunity to grow?
Final Thoughts
Amazon is a great company. And for long term investors, the stock price will continue to appreciate. But if you want to own a solid e-commerce company whose stock offers a lot more growth and a lower price entry point, then look no further than Alibaba.
It wouldn’t surprise me in a few years if this company was approaching the four figure share price as well.
This author has no positions in any stock mentioned and does not plan to open any positions in any stocks mentioned for at least 72 hours after publication of this article.