JD.com, Inc. (JD): E-Commerce Giant with High Margins and Strong Logistics

We recently published a list 7 Best Cheap Stocks to Buy Under $50. In this article, we will see where JD.com, Inc. (NASDAQ:JD) stands against the best low-cost stocks to buy under $50.

Where Are the Best Opportunities in the Current Bull Market?

A lot has happened in the stock market over the last few weeks. The Fed cut rates by 50 basis points to help the weakening labor market. A few days ago we saw the Chinese stimulus announced which included some positive steps by the government to ease the economic pressure.

We recently covered China’s stimulus and its expected impact on the global economy 7 Cheap Internet Stocks To Invest Now. Here is an excerpt from the article:

“Currently, the Chinese stock market has seen a sharp rally, driven by several aggressive measures by the government to revive the economy. China is the second largest economy in the world and one of the key players in the technology industry. This large economy has faced several challenges in recent years ago in the form of a sharp decline in the property market and a lack of consumer confidence.

Government measures include interest rate cuts and an injection of liquidity into the market. On September 24, Reuters reported that China’s central bank cut bank reserve requirements by 50 basis points and it also cut interest rates by 20 basis points to 1.5%. Moreover, the bank also plans to issue 2 trillion yuan in special sovereign bonds.

This measure sent the CSI 300 trading index higher. The index closed 4.5% higher after the announcement while the Hong Kong Index rose 3.6%. This move by China’s central bank is said to have positive effects around the world. Analysts in the United States have discussed the news as a “China Boost”. Although many analysts call this push to be short-lived, others believe that this is a positive mood and will benefit the market in the long run.

The Fed’s rate cut and China’s stimulus are expected to affect the market positively. Adam Parker, founder and CEO of Trivariate Research; Lauren Goodwin, New York Life Investments chief market strategist; and Kristina Hooper, Invesco’s chief global market strategist joined CNBC recently to talk about the best opportunities in the current bull market.

Adam Parker says the market is overestimating the actions of the Federal Reserve. He highlighted optimism about the deployment of AI in the next few years, but he also raised concerns about market valuations exceeding economic reality. Parker is interested in the healthcare sector as it is driven by AI and believes that this will put the industry in a leading market position. He also believes that the Chinese Stimulus is a positive sign for the energy and industrial sectors.

On the other hand, Lauren Goodwin talked about how to cut the speed that is supposed to affect the market. He thinks growth is a key indicator when analyzing the market. When the Fed cuts rates, profits and income margins usually stay where they are until growth starts to slow. Moreover, he also pointed out that it is difficult to see a real economic catalyst that gives growth to an upstart, without inflation. He also thinks that the coming period will fluctuate between growth kicking in and then slowing down. Goodwin said he was going to be a rally buyer until unemployment started to rise and growth became a problem.

Lastly, Kristina Hooper called the latest Fed cuts a crisis cut in a non-crisis environment. He stressed that the Fed is keeping pace with growth, however, we will see a slowdown for a while. The Fed not only cut its interest rate by 50 basis points but is expected to cut it by another 50 during the year and more next year. These tariff cuts are akin to dumping jet fuel on the market but that doesn’t mean the stock market will go crazy. Hooper thinks the fuel will help industries that haven’t rallied recently take advantage of the accelerating economy. He cited cyclicals as one of the industries expected to enjoy a growth rally and also pointed out that the recent Chinese stimulus would only help the cause.

Our methodology

We compiled the 7 best low-cost stocks under $50 using the Finviz stock screener. Using our screener, we first aggregated a list of stocks that trade below the Forward-to-Earnings ratio of 23.98 (forward market P/E as per the Wall Street Journal) and stock prices below $50. We also consider the EPS growth rate. Then we ranked the list by the number of hedge funds to get the best stocks. Please note that the list is sorted in ascending order of the number of hedge fund owners in Q2 2024.

Do we care what hedge funds are? The reason is simple: our research shows that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter strategy picks 14 small-cap and large-cap stocks each quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

JD.com, Inc. (JD): E-Commerce Giant with High Margins and Strong LogisticsJD.com, Inc. (JD): E-Commerce Giant with High Margins and Strong Logistics

JD.com, Inc. (JD): E-Commerce Giant with High Margins and Strong Logistics

A broad and extraordinary view of the supply chain distribution center, reflecting the company’s technological capabilities.

JD.com, Inc. (NASDAQ:JD)

Share price: $39.90

Forward P/E ratio: 9.56

Revenue Growth This Year: 28.00%

Number of Hedge Fund Holders: 59

JD.com, Inc. (NASDAQ:JD) is a key player in the e-commerce industry in China and internationally. The company has a unique business model for an e-commerce retailer. Usually such companies have third-party vendors who deliver and manage the product return process. However, for JD.com, Inc. (NASDAQ: JD) the company not only acquires its inventory at wholesale prices but also manages its own logistics. This results in high margins for the company and also as one of the differentiating factors in the competitive market.

The second quarter of 2024 revealed that its logistics arm was the strongest contributor in terms of revenue growth. The segment’s revenue increased by more than 7.9% year-over-year and even beat its market revenue growth.

Overall, the company’s revenue rose 1.2% year-over-year to $4.1 billion. Of this $3.3 billion comes from general merchandise products. Business in China seems to be stabilizing, moreover, the recent rate cut by China’s Central Bank also puts the market in a strong position, especially for undervalued stocks.

JD.com, Inc. (NASDAQ: JD) is also cheap at the current level which means it is well positioned to benefit from the current market conditions. It ranks 6th on our list of the best low-cost stocks to buy under $50.

Ariel Global Fund said this about JD.com, Inc. (NASDAQ:JD) in its 2024 first quarter investor letter:

“We initiated a position in a China-based technology-driven E-commerce company, JD.com, Inc. (NASDAQ: JD). The brand has long been recognized throughout the region as the leading online shopping channel due to its unique first-party model and unparalleled fulfillment services based on JD Logistics. However, a challenging macro environment drove stocks lower as buyers began looking for bargains. In response, the company made significant investments in improving its third-party merchant platform to increase product offering diversity and price competitiveness for customers. We believe these actions will result in an improved product mix, stronger top-line growth and margin expansion on a going-forward basis.

Overall, JD rank 6 on our list of the 7 Best Low-Cost Stocks to Buy Under $50. While we acknowledge JD’s potential for growth, our belief lies in the belief that AI stocks hold greater promise to deliver higher returns and do so in a shorter time frame. If you’re looking for promising AI stocks that trade at less than 5 times their earnings, check out our report on the cheapest AI stock.

READ COUNTRY: A $30 Trillion Opportunity: The 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.

Disclosure: None. This article was originally published on Insider Monkey.

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