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2021-06-16

Amazon and Google is here to stay for the long haul. Big players, stable investment but hard for small time investors to see ROI.

Amazon: A No-Brainer For The Next 10 Years

2021-06-16

Too much Nio noises what about Xpeng? It’s doing just as well. Rooting for Xpeng

NIO: Buy This Chinese EV Manufacturer While It's Still Cheap

2021-06-16

$Apple(AAPL)$I sold my apple shares at $126 slow progress. Long term play.

2021-03-02

Should have gotten baba at $220 when I stillhad the chance. Nonetheless still great stock to buy for the long haul

6 Reasons Alibaba Is Set To Soar And Too Cheap To Ignore

2021-03-02

Should have gotten BABA at $220. Nonetheless still undervalue and great stock to keep for the long haul.

6 Reasons Alibaba Is Set To Soar And Too Cheap To Ignore

2021-03-02

Would never buy Tesla stock on its own. Willonly buy ETF that includes with Tesla. Less risky.

'Build Me An Ark': The Tsunami Of Risk Of Tesla-Bitcoin-Cathie Wood Is Coming

2021-03-02

Ok

Looking For The Top Tech Stocks To Buy? 2 Reporting Earnings This Week

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Big players, stable investment but hard for small time investors to see ROI.","listText":"Amazon and Google is here to stay for the long haul. Big players, stable investment but hard for small time investors to see ROI.","text":"Amazon and Google is here to stay for the long haul. Big players, stable investment but hard for small time investors to see ROI.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":4,"repostSize":0,"link":"https://ttm.financial/post/160161319","repostId":"1127823989","repostType":2,"repost":{"id":"1127823989","kind":"news","pubTimestamp":1623253090,"share":"https://ttm.financial/m/news/1127823989?lang=&edition=fundamental","pubTime":"2021-06-09 23:38","market":"us","language":"en","title":"Amazon: A No-Brainer For The Next 10 Years","url":"https://stock-news.laohu8.com/highlight/detail?id=1127823989","media":"seekingalpha","summary":"The recent approval of Amazon Pharmacy provides a huge TAM.Amazonis one of the best-known companies in the world, it seems difficult to discover something new in it but the reality is that there is a lot to discover. After performing this in-depth analysis of Amazon, I have realized that most segments are in their early stages. The current valuation is very attractive considering that they are just scratching the surface of the potential of these divisions.Amazon Healthcare has a huge TAM throug","content":"<p><b>Summary</b></p>\n<ul>\n <li>Amazon maintains high advertising potential.</li>\n <li>The recent approval of Amazon Pharmacy provides a huge TAM.</li>\n <li>The company has an interesting future operating leverage due to high capex deployed in logistics.</li>\n</ul>\n<p><b>Investment Thesis</b></p>\n<p>Amazon(NASDAQ:AMZN)is one of the best-known companies in the world, it seems difficult to discover something new in it but the reality is that there is a lot to discover. After performing this in-depth analysis of Amazon, I have realized that most segments are in their early stages. The current valuation is very attractive considering that they are just scratching the surface of the potential of these divisions.</p>\n<p>Amazon Healthcare has a huge TAM through Amazon Pharmacy and Amazon Care (telemedicine). Both divisions are newly approved, so as of today, they contribute virtually nothing to Amazon's bottom line.</p>\n<p>The retail part has a long way to go, with a lot of room for growth with its omnichannel for supermarkets, increases in ARPU, FBA.</p>\n<p>On the other hand, digital advertising is eating the world, and Amazon has recently been getting into it (since 2015). Part of Amazon's advertising five years ago was generating hardly any profit, now it is doubling revenues every two years and this has just begun. Amazon is the most powerful product marketplace globally, so it makes perfect sense that the wild growth in advertising continues to grow at high rates.</p>\n<p>We still have the optionality in gaming, the growth in prime ARPUs, the Audio and Video division, in short, numerous segments that have not yet started to contribute sales and Amazon is currently trading at about 35x normalized FCF, expensive? In our opinion considerably cheaper than the multiples at which the market is trading.</p>\n<p><b>Product</b></p>\n<p>Amazon is a company that has always had a long-term focus. This means that since its inception, it has renounced short-term profitability to become one of the most important companies in the world in the long term. There is no doubt that it has achieved this goal and we are right at the moment where Amazon is beginning to reap what has been sown for so many years.</p>\n<p>In its early days, Amazon focused on the user experience when shopping online. Amazon offered a simple, accessible and universal way to buy products to guarantee the highest number of reviews and arrive in record time. In addition, acquiring a product on Amazon carries the guarantee of delivery of the same; this means that if you have any kind of problem with the reception of the product, Amazon solves it in record time.</p>\n<p>This first phase has been very successful and has been the foundation of Amazon 2.0, which has been integrating more and more services and improving its original product: e-commerce. This image summarizes very well the evolution of Amazon from a Prime 1.0 to a Prime with a much higher added value.</p>\n<p><img src=\"https://static.tigerbbs.com/d99378da746d0c3e0141d21e45729e0d\" tg-width=\"533\" tg-height=\"357\" referrerpolicy=\"no-referrer\">Thanks to this user experience created by Amazon, it has been one of the main contributors (or rather the main contributor) to the explosive evolution of e-commerce, making its penetration increasingly higher and its growth very high.</p>\n<p>According toStatistadata, e-commerce penetration worldwide is 50.8% in 2021 and is expected to reach 63.1% in 2025. Average spending per person exceeds $700 per year. Between 2020 and 2025, e-commerce revenues are expected to grow by 50%, so far from being a mature market, it is still growing strongly.</p>\n<p><b>Amazon Prime</b></p>\n<p>We all know what this service entails, so I am not going to explain it at length. More and more new services are being integrated into Amazon Prime, making it one of the must-have subscriptions for users.</p>\n<p>A chronological summary of Amazon's evolution in the US (its most mature market) is essential to understand the evolution of prices and value-added over time.</p>\n<p>Amazonlaunches Prime subscription in the US in 2005for $79 per year. In 2006, Amazon moved forward and launched Fulfilled by Amazon. This service allows sellers to have a store on Amazon and ship their products for a fee. These products then become eligible for Amazon Prime, increasing the assortment and selection available to customers.</p>\n<p><img src=\"https://static.tigerbbs.com/26ee6071f10355c56905089335e248a9\" tg-width=\"640\" tg-height=\"264\" referrerpolicy=\"no-referrer\">Starting in 2011, Amazon included Prime Video in subscriptions, which meant 5,000 movies and series for every subscriber.</p>\n<p>2014 was a great year for Prime, not only because there were many new services added, but also because there was the first price increase, Amazon raises from $79 to $99 the subscription in the U.S. This same year Amazon Prime Pantry is launched, offering customers the ability to buy essential supermarket products (toilet paper, drinks, creams) for a meager fee and regularly. Also in 2014, Amazon Music was launched with the Prime subscription, giving access to a catalog of 60M songs, on a par with the best streaming services. Amazon photos are also launched, a service that offers high-resolution photo storage with Amazon's own subscription. Finally, Amazon launches; Amazon Now, a supermarket service in which you receive your products in 2 hours (or one in certain areas) with free shipping cost from $ 50.</p>\n<p>In 2015 Amazon Prime Day was created to celebrate the 20th anniversary, in which 24 hours offers to appear to be the day of Amazon's biggest sale since its launch.</p>\n<p>In 2016, same-day delivery to 27 metropolitan areas was introduced. Prime also joins Prime, Prime Reading, which offered more than 1,000 books and magazines free of charge.</p>\n<p>In 2017, an agreement was formed with Chase to create a credit card that offers Prime subscribers at no added cost a 5% cash back at Amazon or Whole Foods for purchases made. Prime Wardrobe is also launched in 2017, a service that allows you to try on clothes, jewelry or similar in a period of 7 days before having to pay. That same year Amazon Key is launched, a smart lock that allows opening the home from the Smartphone to trusted people (seeing through an integrated camera), open the door from your own Smartphone or with a personal code. In addition to this, it allows Prime members to receive Amazon packages in their garage, house, without needing a key, simply through the APP.</p>\n<p>In 2017, the acquisition of Whole Foods was made, which is integrated into Amazon with discounts, free shipping or cashback when paying by card.</p>\n<p>In 2018 comes a second price increase from $99 to the current $119, an increase of $40 since its launch in 2005.</p>\n<p>In 2019, Amazon Fresh launched Prime subscribers, offering free in select cities fresh grocery delivery service.</p>\n<p>Finally, in 2020 Amazon Prime Gaming is launched, a service built into the Prime subscription that provides free games, exclusive gaming content and a free Twitch subscription.</p>\n<p>The evolution of Prime has been impressive, incorporating new services year after year to make Amazon's subscription indispensable in our lives. Seeing the evolution in subscribers, it seems evident that it has achieved its purpose.</p>\n<p>Prime's evolution has taken us to200M subscribers in 2020globally of which 153M are from the US.</p>\n<p><img src=\"https://static.tigerbbs.com/98abbd226ea68e7b6dd19537677a9888\" tg-width=\"588\" tg-height=\"374\" referrerpolicy=\"no-referrer\">Source: Emarketer, Statista</p>\n<p>Given the penetration, Prime's growth has slowed down in recent years, although users are becoming more and more accustomed to the service and it is becoming one of the essential subscriptions. This in our opinion, will lead to pricing power, something we have already seen in the United States, where the price for the subscription is substantially higher than the international subscription.</p>\n<p>Below is a comparison of subscription costs in different countries:</p>\n<p><img src=\"https://static.tigerbbs.com/250693f17a1239d59514520d8656fecb\" tg-width=\"343\" tg-height=\"373\" referrerpolicy=\"no-referrer\">Prices have risen compared to2018(these are as of year-end 2020). It is expected that prices will continue to rise gradually to generate higher earnings per user (ARPU).</p>\n<p>The first thing we notice is that the disparity between countries is high. In my opinion, where there is more room for prices to converge is in Europe, as Prime becomes more mature and incorporates higher quality content (as it has done in the US). This table shows that there is still a long way to go in terms of ARPU. Even in the US the price of an Amazon Prime subscription, taking into account everything included (music, video, access to Pharmacy, free shipping, storage), is well below other comparable subscriptions.</p>\n<p>Penetration in the United States is at its highest, 77% of people who buy on Amazon are Prime users. In 2020 this percentage was 67% so we have substantial growth; in fact it is one of the highest growth rates in the last decade.</p>\n<p>The Prime user is more profitable since he/she tends to spend 2-3 times more per month than a non-Prime user. In e-commerce, Amazon is the clear dominator with amarket sharein the United States of more than 50%. Being the clear dominator in a market thatwill grow at double digitsfor the next 5 years (probably also for the next 10 years) is undoubtedly very interesting. Another important point is that retail is a huge market where Amazon is just scratching the surface but has certainly positioned itself to capture more and more market share as the years go by. Amazon has only9% ofUS retail sales, while Walmart has 9.5%. To give you a sense of Amazon's traction, in 2019 it only had 6.8%. Although it is clear that COVID has helped it gain traction, over the years it has always been gaining more market share. Amazon knows this and is substantially increasing fulfillment CAPEX.</p>\n<p>The maturity of the Prime subscriber is also something important. As the years go by the Prime subscriber tends to consume more, so we could say that even a Prime subscriber has a rump-up period as we can see in this graph:</p>\n<p><img src=\"https://static.tigerbbs.com/5636145e9a1d04a4f1d4f1643c0550a1\" tg-width=\"436\" tg-height=\"252\" referrerpolicy=\"no-referrer\">In certain markets such as India, where Amazon has focused a lot of attention and investment, Prime membership growth has been exceptional. According to the head of Prime in the country, Prime membership has doubled between 4Q17 and 2Q19. While some of that growth may have been driven by Amazon's material investment in local digital content and Prime rate incentives, we believe many of these members will become more engaged retail customers as their financial situation improves over time.</p>\n<p>There are doubts about whether the momentum resulting from COVID in e-commerce will slow down with the reopening of e-commerce. Data from the first quarter of 2021 (with a reasonable reopening) shows that far from slowing down, growth has even accelerated above pre-COVID levels. This makes sense as certain users are reluctant to shop online and have been relatively forced during the quarantine. Having made purchases online has allowed them to lose that fear and become e-commerce users that would have taken longer to become so had it not been for COVID.</p>\n<p>Currently, 66% of GMVs (Gross Merchandise Value or total amount transacted in resales without discounts) come from the United States, the most mature market. In the future, the projection is that the mix of GMVs between US and Non-US will converge to 50% since it is in the rest of the markets where growth is currently highest.</p>\n<p>Market penetration is gradual and to get an idea of how it is evolving; we must look at the most mature market: the United States.</p>\n<p><img src=\"https://static.tigerbbs.com/fa586d6b9e788420999aa48c50811040\" tg-width=\"553\" tg-height=\"351\" referrerpolicy=\"no-referrer\">Currently, 67% of U.S. households with internet have a Prime subscription.</p>\n<p><b>Fulfillment by Amazon (FBA)</b></p>\n<p>More than half of the units purchased on Amazon's global marketplaces are sold by third-party merchants: sellers large and small who benefit from having access to Amazon's millions of customers. Your Seller Care business enables you to offer a wide selection of products by engaging these sellers and helping them manage their business on the platform.</p>\n<p>Fulfillment by Amazon (FBA) is a program that allows sellers to ship their inventory to Amazon's distribution centers, where they create, pack and ship orders for them, as well as handle customer service and returns for them. Their products become part of the Prime program, so they reach an even larger audience, and the seller spends fewer resources on inventory management and shipping.</p>\n<p>FBA started in 2005 with just a handful of vendors. Teams of business and technical professionals build all the systems that enable it, including tools that provide real-time data and reports and allow companies to manage their inventories remotely and from any device.</p>\n<p>The fulfillment part benefits from operational leverage, managing to contain unit costs and generating a higher and higher free cash flow. To understand the service in greater depth, we can look at Amazon's FBA service fees to third parties, which occupy almost 50% of the GMVs.</p>\n<p><img src=\"https://static.tigerbbs.com/1165bbedf3c99919df3b86f97386eb31\" tg-width=\"640\" tg-height=\"316\" referrerpolicy=\"no-referrer\">Amazon has been investing in its fulfillment network for many years, reinforcing its increasingly evident MOAT regarding logistics capacity and customer experience. So high has been the deployment of Capex that today it even rivals companies whose core business is precisely that:</p>\n<p><img src=\"https://static.tigerbbs.com/b2b35107ea150c8462f41cf6ff2f1975\" tg-width=\"431\" tg-height=\"213\" referrerpolicy=\"no-referrer\">Source: Annual report, FactSet estimates</p>\n<p>With the scale that Amazon has acquired, it would not be unreasonable to become a more efficient logistics platform than even pure competitors.</p>\n<p><img src=\"https://static.tigerbbs.com/d093110e0653de7cd4b486dbcf1543f4\" tg-width=\"640\" tg-height=\"253\" referrerpolicy=\"no-referrer\">The graph shows how the simplest route an order can take is directly from the seller to the buyer through a third-party service, where Amazon never actually touches the product, only puts the Marketplace.</p>\n<p>For orders that do go through Amazon's network, the company groups inventory into three different categories:</p>\n<ol>\n <li>Small classifiable: consumer items that make up the majority of the business. These are everyday items such as books, video games, and small-weight items.</li>\n <li>Large sortable: Items with a higher weight may require more manual systems due to their size.</li>\n <li>Large unsortable: Items that due to their size or weight, are handled with less automation, often in different locations and require more specialization for their preparation, such as specific packaging. Most of these shipments are delivered by third parties, mostly XPO.</li>\n</ol>\n<p>Small and large collection and packaging facilities are usually located in the same building but separate divisions.</p>\n<p>A key defining characteristic of small and large sortable items is that they can fit into a box placed on a conveyor belt for automatic sorting.</p>\n<p>Intuitively, small sortable items are also where the company has implemented the most automation, including robotic picking functionality.</p>\n<p>2013 was a turning point for FBA. We are talking about the 1,050 fulfillment network points today; only 58 were open before 2014, or 5%. Before 2014 there were no airports; there was hardly any infrastructure compared to today. 2020 is once again a turning point; 45% of fulfillment centers have been or will be built after 2020.</p>\n<p>This has undoubtedly been reflected in the 2020 CAPEX, which has risen considerably compared to previous years, from 5% to 9%. Excluding the increase in 2020 CAPEX, annualized growth since 2013 is 37%, above sales growth. Not all of this growth is due to fulfillment. Still, reading the letters from management, it is clear that a large part of this growth comes from this division, saying that the costs associated with \"last mile delivery\" had increased substantially.</p>\n<p><img src=\"https://static.tigerbbs.com/ab81f81d8d08e98fa4819e90b6a553e1\" tg-width=\"581\" tg-height=\"420\" referrerpolicy=\"no-referrer\">This Capex is reflected in the evolution of the square meters of fulfillment:</p>\n<p><img src=\"https://static.tigerbbs.com/5eb5e8f0ce6c11a4e1a96e2ab8002586\" tg-width=\"574\" tg-height=\"322\" referrerpolicy=\"no-referrer\">Growth in line with all of the above.</p>\n<p>Amazon is also increasing its aircraft fleet, which started in 2016 following the agreement with ATSG and Atlas Air to lease 40 aircraft (20+20). Currently, the fleet of aircraft under lease is 82 plus 11 owned aircraft, a total of 93, so it has more than doubled the fleet in less than 5 years. These movements make clear Amazon's intentions to boost the air service. If it continues simultaneously, we would have about 200 aircraft in 2016 between leasing and ownership.</p>\n<p>In the following image, we can see Amazon's air gateway network, with its usual spans. The network represents a key piece of the company's proprietary distribution network that has not been replicated by any other retailer and is a key function that allows Amazon to operate without the networks of third-party carriers.</p>\n<p><img src=\"https://static.tigerbbs.com/9eeec3e1927a51a580d7007e6caba3c2\" tg-width=\"640\" tg-height=\"535\" referrerpolicy=\"no-referrer\">Source: Chaddick Institute</p>\n<p>In Europe, it also has a network in the main capitals: Madrid, Barcelona, Paris, Milan, Rome, Cologne and Leipzig.</p>\n<p>The current gap in the fleet is significant concerning UPS and FedEx, but Capex is deploying Amazon would not be surprised to have a similar fleet by 2030.</p>\n<p>And all this for what? Considering how much Amazon is spending on logistics, it's clear it has a purpose. FBA sales went from $1b in 2011 to $40b in 2020, a significant jump. Rumors indicate that Amazon would like to start competing with UPS and FedEx in offering their services not only for its Marketplace but also for third parties. This may be indicative of the program launched in 2017 \"Seller Flex) which is a variant of the FBA program but in-house. This means that you can leverage Amazon's logistics tools without having to deposit inventory in Amazon's fulfillment centers. This is already a very similar service to that provided by pure shipping players.</p>\n<p>Following the launch of FBA Onsite, Amazon began internal testing of Amazon Shipping, a third-party shipping service that complemented FBA onsite. Early on reports suggested that Amazon would be able to undercut third-party carriers by leveraging the capacity it already used for its own deliveries and eliminating added costs. After more than two years, Amazon Shipping remains an internal trial put on hold by the arrival of COVID, as Amazon itself needed all of its logistics capacity for internal use.</p>\n<p>Is there really an opportunity here? Let's look at the sales and operating profit of the main players: UPS and FedEx.</p>\n<p><img src=\"https://static.tigerbbs.com/44a8276c53a9261ed6a84a8607ce87e9\" tg-width=\"356\" tg-height=\"113\" referrerpolicy=\"no-referrer\">Between them they generate 40% of Amazon's sales and 53% of operating profit. Obviously, Amazon will not capture all the business from both, but it gives us an idea that it is a large market that can provide incremental sales for Amazon.</p>\n<p>Considering all the opportunities on the table: Pharmacy, Grocery, Gaming, Advertising) Amazon Shipping will likely be delayed for a while, not one of the most immediate priorities. The deployed Capex itself serves for internal use with much more intense value chain control.</p>\n<p>We can really see the benefits of that CAPEX for fulfillment in the gross margin. The cost of sales is associated with Amazon's shipping costs, both in-house and through third parties. As in-house shipping has been gaining scale through CAPEX deployment, the gross margin has been increasing, and this is entirely normal given that this segment is pure volume. This means that a company that does not move Amazon's volume will not be compensated for the Capex deployed by Amazon. Still, on the other hand, a company like Amazon that increases the number of shipments in double digits year after year shows that the higher the volume, the higher the cost savings per shipment that the CAPEX deployed will compensate. This is a key point, as Amazon has a greater weight in own shipping and less in third parties, it will acquire a higher gross margin because the cost of own shipping is significantly lower than using a third party such as UPS or FedEx.</p>\n<p><b>AWS</b></p>\n<p>We believe that AWS will continue to be the dominant player in IaaS/PaaS as it captures most of the future growth in the industry due to its huge customer base.</p>\n<p>There should be plenty of growth opportunities for all three vendors. Gartner's forecast for IaaS and PaaS implies a 25% revenue CAGR between 2020 and 2023 and a market of nearly $200 billion by 2023.</p>\n<p><img src=\"https://static.tigerbbs.com/c931481c0a035bcced96f4f401235488\" tg-width=\"630\" tg-height=\"423\" referrerpolicy=\"no-referrer\">As for margins, they have danced between 20-30% despite aggressive pricing plans with a total of 20 discounts between 2018 and 2020 and so far 1 in 2021. The drop in margins in 2019 was due to an increase in investments for sales and marketing issues, which was only a short-term issue.</p>\n<p><img src=\"https://static.tigerbbs.com/13a64e7975829481aa0bedba683c33fa\" tg-width=\"586\" tg-height=\"353\" referrerpolicy=\"no-referrer\">Amazon is the clear dominator in the cloud market and although it has lost market share in recent years, this has not prevented it from growing at very high rates. What's interesting? The expectation is that thecloud marketwill grow from 2020 to 2025 at a compound rate of 17.5%. Considering that it is currently the company's division with the best margins, this is great news for Amazon's future.</p>\n<p>Amazon'sbacklogis accelerating its growth; we talk about the last year has grown more than 50% YoY while AWS sales growth is more in line with 30%. The backlog is contracts with an average maturity period of 3 years that end up materializing in sales, so seeing the rate at which it is growing is certainly very interesting.</p>\n<p>Backlog contracts are usually with large companies to whom they make offers with consequent price cuts. AWS is being aggressive but can afford to be given the margins it operates on.</p>\n<p>The backlog currently exceeds $50b, which should materialize over an average period of 3 years. This will be AWS sales but does not mean that these are the only sales that will materialize as there will continue to be growth in shorter-term contracts as at present.</p>\n<p><img src=\"https://static.tigerbbs.com/24e0033a5094a6f45b6cf02363014fcd\" tg-width=\"575\" tg-height=\"347\" referrerpolicy=\"no-referrer\">Source: Annual Report &amp; Morgan Stanley Estimates</p>\n<p>This graph shows exciting data. As I mentioned, the backlog has accelerated its growth while sales per se have been maintained (the last quarters). In the medium term, both curves will tend to converge.</p>\n<p><b>Supermarket</b></p>\n<p>The supermarket sector is gigantic and today, Amazon's US market share in this segment is less than 3% of 2020 sales. Considering that Amazon's penetration in this segment is increasingly higher and that Amazon is learning more and more due to the integration of Whole Foods and the opening of Fresh, Go stores and above all, physical locations.</p>\n<p>The opening of the first Amazon Fresh store in California is very recent; we are talking about September 2020 and from that date until May 2020 the number has risen to 12. Considering the pace of openings, it is clear that Amazon wants to focus on an Omnichannel model where you can buy physically or online, whichever best suits your needs at any given time.</p>\n<p>Amazon stores average 35,000 feet in size, selling about $754 per foot, in line with comparables such as (Wegmans, Kroger, Ahold) so the pace of Amazon's store rollout will mean interesting incremental sales (depending on the number of stores)</p>\n<p>On the other hand Amazon is focusing on the consumer experience.Amazon Dash Cartis turning the shopping experience into something totally different. It will have a small initial learning curve for the consumer, but it substantially improves the supermarket shopping experience once the concept is understood. We are talking about a supermarket cart with intelligence to account for every product you put inside automatically. You can leave with the purchase without having to go through the checkout or similar, and to all this add, it lets you know how much you have spent at each moment, making the experience much more efficient.</p>\n<p>Therefore Amazon offers an omnichannel experience in which you can buy online and receive same-day delivery for free (on orders over $50 for prime users). You can also place the order and pick it up at the store or simply buy it in the store itself; let's say it's a similar approach to Inditex.</p>\n<p>Having the ability to do click &amp; collect or simply order to home delivery allows stores to leverage stores in various ways that will generate operational leverage and increased margins as order volumes increase.</p>\n<p>The current trend is towards healthy food and in Amazon Fresh Stores, there is ample space for fresh and prepared food; we have space for fresh seafood, a sushi bar or even fresh pizza in the supermarket itself.</p>\n<p>Reviews of the Amazon Fresh stores on google are very positive, with an average of 4.3 stars across all 12 locations and over 3,000 votes.</p>\n<p>In a survey conducted by UBS in its 7th annual eCommerce survey, all respondents were asked the main reasons for buying online. With 43% of the answers, the most chosen was the convenience and comfort of doing it. It was a key point for the penetration to continue increasing since it is not because of something temporary such as prices, greater selection, but because of something structural.</p>\n<p>On the opposite side, reasons for not buying online would be in the first position with 45% \"I prefer to see and touch the product.\" Another main reason is that it is easier to buy physically and this can be key, making online shopping more accessible with improvements to the process itself.</p>\n<p>To get an idea of how the Amazon Groceries process works we have the following scheme:</p>\n<p><img src=\"https://static.tigerbbs.com/177141503cc09a782b0fc3ec7df8cd63\" tg-width=\"640\" tg-height=\"309\" referrerpolicy=\"no-referrer\">Looking at the schematic, it is easy to understand how Whole Foods fits into the process. Having incorporated physical stores, they serve as a logistics hub for shipments, allowing Amazon to improve efficiency.</p>\n<p>In addition to being focused on all the aspects mentioned above, Amazon has also been concerned about generating its own brand, where margins are higher. An example of Amazon's own brands can be seen below.</p>\n<p><img src=\"https://static.tigerbbs.com/10f30cc5515047623531828738fa6180\" tg-width=\"640\" tg-height=\"293\" referrerpolicy=\"no-referrer\">Especially in the last few years (since 2017), Amazon's own brand has been significantly boosted. We talked about that in 2017 there were less than 20 Amazon own brands and very few products for sale. Currently, it has more than 120 own brands and 22,617 available. In addition, Amazon's own brand has an average of 4.3 stars reflecting consumer satisfaction levels.</p>\n<p><b>Amazon Ads</b></p>\n<p>This is one of the biggest surprises and most undervalued assets that Amazon currently has. Advertising revenue is a source of income that is growing at an accelerated rate; we are talking about the fact that only 5 years ago, it was non-existent and now it is doubling every two years:</p>\n<p><img src=\"https://static.tigerbbs.com/1174f49304a8d987eeffaabd69393d14\" tg-width=\"548\" tg-height=\"412\" referrerpolicy=\"no-referrer\">This evolution makes sense, considering that Amazon is the most powerful showcase globally to sell products, so being able to appear in the top positions is undoubtedly something very interesting for products. We are talking about a gigantic market where Amazon is just scratching the surface.</p>\n<p>Considering the advertising spending of listed defensive consumer companies, we can get an idea of the size of this market, where Amazon has not yet monetized practically anything. Proof of the potential is simply to look at the growth in sales over the last few years, which gives us an idea of what is behind this market.</p>\n<p>Advertising continues to shift to digital, and according to eMarketer, online advertising will account for approximately 64% of total advertising by 2024. This makes sense considering that it is much more direct advertising and reaches the consumer better than traditional media (TV, radio).</p>\n<p><img src=\"https://static.tigerbbs.com/5af8cc7425a991f2e6d6e94f71d29fbd\" tg-width=\"568\" tg-height=\"354\" referrerpolicy=\"no-referrer\">Amazon within digital advertising is the greenest, in earlier stages while Google and Facebook are already much more mature advertising platforms.</p>\n<p>It is undoubtedly effective advertising, do we have doubts that it is a boost in sales to appear at the top of the most important Marketplace in the world? We certainly do not. We believe that it is a part of income that makes a lot of sense and will grow exponentially. The structure of Amazon searches is usually as follows:</p>\n<p><img src=\"https://static.tigerbbs.com/18aa88ac767b673ccddb587eb8bc7d01\" tg-width=\"623\" tg-height=\"458\" referrerpolicy=\"no-referrer\"></p>\n<p><b>Amazon Healthcare</b></p>\n<p>Although you find little more than a footnote about the Healthcare part of the business in Amazon's accounts, Amazon and TAM's plans for this segment are very strong. In November 2020Amazon Carewas approved in WA and will be present in 50 states by the summer and enable the distribution of prescription drugs, opening up a range for exciting new revenues.</p>\n<p>Amazon Care is Amazon's online clinic, which is expanding staff from the end of 2020. Amazon care launches as an internal trial (many Amazon divisions are born this way) in autumn 2019, offering a virtual medical clinic to employees to facilitate access to high-quality primary care online (although home visits are available in some areas). This initiative makes perfect sense in the United States, where healthcare is not universal and health insurance is expensive.</p>\n<p>With Amazon Care you also have urgent care through its application; the services offered by the application are:</p>\n<ul>\n <li>Make an appointment</li>\n <li>In-person follow-up care (select states only)</li>\n <li>Medical examinations</li>\n <li>24/7 service team, 365 days a year.</li>\n <li>Recipes delivered to your home.</li>\n <li>Vaccines.</li>\n <li>Virtual consultation.</li>\n</ul>\n<p>Within the application itself you have Care Chat, a chat that allows you to connect with registered nurses to get advice on health problems.</p>\n<p>Amazon intends to offer this service to independent companies seeking to provide this service for their employees and families. This segment will take time and where it is necessary to have a long-term vision, although the potential is certainly high.</p>\n<p>Amazon is interested not only in the pharmacy business, a B2C business but also in the B2B segment of medical device distribution, which would save a lot of paperwork for hospitals as it is a more direct distribution agreement that could save administrative procedures such as GPOs.</p>\n<p>Concerning the pharmacy side, it is clear that Amazon fits mostly into the hybrid physical plus online presence, emphasizing the online side.</p>\n<p>The combination of Whole Foods + Amazon and Prime Now is powerful for this approach and Amazon already distributes many pharma products. However, I expect a substantial increase and greater efficiency (in terms of delivery times in Europe) in adding new products to the platform.</p>\n<p>It is clear that Amazon is interested in the points mentioned above and this is reflected in its chronological evolution:</p>\n<ul>\n <li>In 2018 Amazon launches its own brand: Basic Care.</li>\n <li>In 2018 it acquired an online pharmacy: PillPack, which operates with a digital license in 49 states covering 90% of American households.</li>\n <li>Late 2018 reported talks with startup Xealth and the hospital network to allow doctors to purchase medical devices.</li>\n <li>Reported in 2018 negotiations to buy MedPlus a company with 1,400 pharmacy outlets in India.</li>\n <li>September 2019 launches Amazon Care.</li>\n <li>B2B growth has been more than x10 since 2016.</li>\n <li>March 2021 national expansion of Amazon Care to begin in the summer of 2021.</li>\n <li>Launch of Amazon Pharmacy in 2020.</li>\n</ul>\n<p>Selling pharmacy products with the Whole Foods combination allows for 2-hour delivery in the USA, which is very interesting thanks to Amazon's logistical features.</p>\n<p>Amazon has been taking steps in this direction for a few years and the most complicated part, which is to establish the infrastructure, is already more than done. Right now, Amazon can sell in the U.S. both online and via \"mail,\" the two most widely used, so its entry into this segment is already complete:</p>\n<p>The final launch ofAmazon Pharmacycame in November 2020 through which prescription drugs will be available. It is currently approved in 45 states which means covering 90% of the American population. Amazon Pharmacy has a proposal to save 80% on generic and 40% on brand-name drugs when you do not pay with insurance and compare the price you get on Amazon with that of another possible distributor.</p>\n<p>For any user who does not have insurance, currently, the prices offered by Amazon are the lowest. Those Prime users on Prime RX will receive discounts between 40-80% with deliveries of less than 2 days (free delivery).</p>\n<p>The Amazon Pharmacy market is gigantic; we are talking about a market that moves more than $350b a year where two-thirds are distributed in retail and one-third via mail. Amazon is already able to reach the retail market and is working on reaching the mail order part, as this is a different market that usually works for chronic ailment drugs on autopilot.</p>\n<p>An important point provided by Amazon Pharmacy is the collection of user data. As an online registry, you have the data of the profile of medicines that a certain person consumes, so this information is precious for certain players.</p>\n<p>There are currently three Amazon pharmacy services:</p>\n<ol>\n <li><b>Amazon Pharmacy:</b>allows customers to order prescription drugs for home delivery. Orders are delivered in discreet packaging to the customer's preferred address. Medications require a prescription from a licensed health care provider.</li>\n</ol>\n<ol>\n <li><b>PillPack by Amazon Pharmacy:</b>part of Amazon Pharmacy and remains a distinct service for customers taking multiple medications daily for chronic conditions.</li>\n</ol>\n<ol>\n <li><b>Amazon Prime:</b>Offers Prime members access to low prices on many brand names and generic prescription drugs when paying without insurance. It can be used to get discounts of up to 80% on generic drugs and 40% on brand-name drugs at more than 50,000 participating pharmacies nationwide, including Amazon Pharmacy and the PillPack by Amazon Pharmacy service.</li>\n</ol>\n<p>Understanding where Amazon is positioned, the opportunity is enormous:</p>\n<ul>\n <li>Retail sale of medicines</li>\n <li>B2B sales of medical devices</li>\n <li>Online medical care.</li>\n</ul>\n<p><b>Gaming and Twitch</b></p>\n<p>Amazon has made several 2014 acquisitions related to gaming; the chronology would be as follows:</p>\n<ol>\n <li>In 2014 Amazon acquires Doublé Helix Games.</li>\n <li>Also in 2014, Amazon acquired Twitch.</li>\n <li>In 2016 it launched a tool: Lumberyard that enables game development.</li>\n <li>In 2016, it acquired the online gaming portal \"Curse.\"</li>\n <li>2018 acquires GameSparks.</li>\n</ol>\n<p>Of all the acquisitions made, absolute reality is twitch, achieving spectacular user and viewing metrics and wild growth.</p>\n<p>The future lies in the cloud and subscriptions, as well as in in-game purchases. Console and game sales have been flat for a few years or with fragile growth, and it is the subscription, cloud and multiplayer, and in-game purchases that have been growing.</p>\n<p>In the future, it is foreseeable that this trend will accelerate with cloud gaming being the clear dominator and console sales declining at high rates, so positioning in this segment will be key to absorb sales in the form of subscription: PlayStation Now, GeForce Now, Stadia.</p>\n<p>Distribution has already changed a lot but from now on the changes are expected to intensify. In the past, the Publisher published the game on the platform or console and the platform or console delivered it to the consumer.</p>\n<p>The new distribution will start from the cloud so that the relationship will start from Azure, AWS or the corresponding player. The broadband provider will come into play and finally, the corresponding cloud platform (Stadia, PlayStation Now...). In this part, there will clearly be a strong growth and where everything remains to be done and positioned.</p>\n<p><b>Music and Video</b></p>\n<p>The $8.45 billion acquisition of Metro Goldwyn Mayer(NYSE:MGM)is significant for Amazon, the company's second-largest acquisition after the $13.7 billion Whole Foods deal in 2017, but representing just half of 1% of AMZN's market capitalization.</p>\n<p>Through the acquisition, AMZN gains access to MGM's extensive library of more than 4,000 films, including notable franchises such as James Bond, Rocky and Tomb Raider. AMZN also acquires 17,000 television programs, including series (Fargo, The Handmaid's Tale) and shows (Shark Tank, The Voice).</p>\n<p>MGM accumulates more than 180 Academy Awards and 100 Emmys. Overall, the MGM deal should allow Amazon to create a more compelling Video offering to attract new subscribers for the Prime ecosystem. The great advantage of streaming and Prime subscription is that it is a business of scale where MGM's acquisition costs are diluted the broader the user base, which is enhanced by this acquisition.</p>\n<p>With 175M users on Prime video and 200 on Prime, this acquisition will possibly catalyze to create new subscribers.</p>\n<p>MGM's content is important and the intellectual property acquired by Amazon, which will allow it to produce more original and exclusive content, which will allow it to compete in a more relevant way with Netflix and Disney.</p>\n<p>We do not rule out that there may be more acquisitions on the video side. The larger the subscriber base, the higher the acquisition costs are diluted over a higher base, positively feeding back into the Prime ecosystem.</p>\n<p>As for the price, it is clear that it has not been a cheap purchase, although the important thing is what its integration means more than what MGM currently generates. We are talking about 25x EBITDA, which is in the highest range of M&amp;A in the average sector. It is understandable considering the current valuations in the markets; of course these have not helped the price to be \"cheap.\" From a broad point of view the integration makes sense in the ecosystem that Amazon is trying to create with Prime.</p>\n<p>When it comes to integrating MGM into Amazon, an important question arises: Is Amazon going to do without the 60% of MGM's revenue generated from content licensing? Is it not going to do without it?</p>\n<p>In the first case, it would become exclusive content of Amazon, generating more value for Amazon Video; in the second case it would not contribute much value to Amazon Video considering that it would not be exclusive content.</p>\n<p><b>Venture Capital</b></p>\n<p>Amazon allocates a small part of its cash to investments in startups and although it is not transparent about this, we do know the intentions of these investments.</p>\n<p>The Amazon Alexa Fund (200M) has a focus on integrating health issues into the home by investing in startups such as Aiva (a virtual assistant that connects seniors with their healthcare service), Tonal (artificial intelligence for home fitness) and Zwift (a virtual cycling app).</p>\n<p>It has recently launched another fund that will invest in Indian startups, mostly related to Healthcare fabrics.</p>\n<p><b>Risks</b></p>\n<ul>\n <li>Covering too many different products or markets: The bets on Amazon Music, Amazon Video and the like, at the moment do not have too much of a view to succeed. Amazon's purpose indeed is to offer an attractive package, not the product separately.</li>\n <li>Bezos' departure should not affect too much considering the company's size, but it is clear that he has been a key figure in Amazon's evolution.</li>\n <li>Regulation. A company of Amazon's size will always face regulatory risks.</li>\n <li>A slowdown in AWS is currently driving operating profit.</li>\n <li>That all the optionality of new business lines does not end up fitting.</li>\n</ul>\n<p>Waymo, although it may not seem like it, is a threat to Amazon. The number of miles traveled by Waymo is increasing and its development is becoming more mature.</p>\n<p>Google with its powerful search engine could create an interesting combination with the shopping part in which you buy through Google, the retailers have the inventory and the logistics are Waymo itself delivering the product autonomously in a short period of time:</p>\n<p><img src=\"https://static.tigerbbs.com/495a0f59e25265e21fd12b548f93b3f1\" tg-width=\"640\" tg-height=\"167\">Amazon has been working for years on drone delivery and making deliveries increasingly efficient, so it has been protecting itself from this potential latent risk for years.</p>\n<p>In the end Amazon wants the process to be as follows:</p>\n<p><img src=\"https://static.tigerbbs.com/9b304d1db1ca34a56deecd34a2e89a2c\" tg-width=\"613\" tg-height=\"344\"><b>Working Capital</b></p>\n<p>To understand Amazon's FCF, it is important to talk about Amazon's working capital changes, as these are very peculiar. The first quarter is always very negative, penalizing the CFO. The following quarters the Working Capital changes neutralize the effect of the first quarter, bringing cash flow to Amazon. This happens mainly because at the end of the year there are many pending payments to suppliers and expenses to be settled, so that at the beginning of the year when these accounts are settled, the changes in working capital are very negative, hurting Amazon's operating cash flow.</p>\n<p><b>Profitability</b></p>\n<p>Amazon's profitability has varied substantially as they have started investing aggressively in the business and growing their assets and capital employed considerably. We are talking about an 80-fold increase in assets since 2006, which reflects the lines I have previously discussed.</p>\n<p>As margins are expanding, the path of improving return on assets and capital employed has returned, with ROCE currently at 20%, ROE at 23% and ROA at 7%. Undoubtedly, these are levels that indicate that Amazon is a quality company. As a note, Amazon is in a period of intensive investments and with a clear potential for margin expansion in the future, so it would be foreseeable that these metrics will continue to rise.</p>\n<p><img src=\"https://static.tigerbbs.com/9b00f1639fd6bc917998f038f3ff60ec\" tg-width=\"597\" tg-height=\"335\"></p>\n<p><b>Valuation</b></p>\n<p>Amazon is a complicated company to value because of its size and the point at which it finds itself; large investments and very high margin expansion potential.</p>\n<p>It currently trades at around 60x EV/FCF. Still, if we normalize both Working Capital and Capex (it has increased from 5% of sales to 9%), we would be talking about 35x EV/FCF for a company with very high quality and with most of the divisions only scratching the surface of their potential.</p>\n<p>Just by looking at the multiples, we could already say that it is reasonable considering the prospects and position of the business.</p>\n<p>It currently trades at about 36x EV/FCF, below its average EV/FCF multiple considering a normalized WC and normalized CAPEX. This already gives us an idea that it can be a company to consider as Amazon today is a much stronger business than 10 years ago.</p>\n<p><img src=\"https://static.tigerbbs.com/0d462cfa442b191e5e27213180f5ad9b\" tg-width=\"556\" tg-height=\"336\">If we project sales and FCF assuming conservative assumptions and normalizing both Cash Flow and Working Capital we obtain the following estimates:</p>\n<p><img src=\"https://static.tigerbbs.com/8546c6d09613082ad5d6e1fdef607bea\" tg-width=\"640\" tg-height=\"214\">Under these assumptions, we performed a valuation by multiples and DCF:</p>\n<p><img src=\"https://static.tigerbbs.com/2d0e31590998b2af7f9f7209db841f59\" tg-width=\"251\" tg-height=\"410\">We would be buying Amazon at a reasonable price without assuming that any of the above optionalities explode, so the margin of safety is wide even though the upside is tight.</p>\n<p><b>Conclusion</b></p>\n<p>Amazon is a company that is reaping the rewards after decades of sowing. These are the years where surprises start to emerge, margins start to expand, and more optionality starts appearing. Having the opportunity to acquire a company of this quality at a \"reasonable\" price is one of those opportunities, from a profitability-risk point of view, that in the long term make the difference.</p>\n<p>It is important to closely follow the evolution of the different segments and the optionality associated with them and the ARPUS of the international segment since it is the one with the greatest potential.</p>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Amazon: A No-Brainer For The Next 10 Years</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nAmazon: A No-Brainer For The Next 10 Years\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-06-09 23:38 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4433845-amazon-stock-amzn-no-brainer-for-the-next-10-years><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nAmazon maintains high advertising potential.\nThe recent approval of Amazon Pharmacy provides a huge TAM.\nThe company has an interesting future operating leverage due to high capex deployed in...</p>\n\n<a href=\"https://seekingalpha.com/article/4433845-amazon-stock-amzn-no-brainer-for-the-next-10-years\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"AMZN":"亚马逊"},"source_url":"https://seekingalpha.com/article/4433845-amazon-stock-amzn-no-brainer-for-the-next-10-years","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1127823989","content_text":"Summary\n\nAmazon maintains high advertising potential.\nThe recent approval of Amazon Pharmacy provides a huge TAM.\nThe company has an interesting future operating leverage due to high capex deployed in logistics.\n\nInvestment Thesis\nAmazon(NASDAQ:AMZN)is one of the best-known companies in the world, it seems difficult to discover something new in it but the reality is that there is a lot to discover. After performing this in-depth analysis of Amazon, I have realized that most segments are in their early stages. The current valuation is very attractive considering that they are just scratching the surface of the potential of these divisions.\nAmazon Healthcare has a huge TAM through Amazon Pharmacy and Amazon Care (telemedicine). Both divisions are newly approved, so as of today, they contribute virtually nothing to Amazon's bottom line.\nThe retail part has a long way to go, with a lot of room for growth with its omnichannel for supermarkets, increases in ARPU, FBA.\nOn the other hand, digital advertising is eating the world, and Amazon has recently been getting into it (since 2015). Part of Amazon's advertising five years ago was generating hardly any profit, now it is doubling revenues every two years and this has just begun. Amazon is the most powerful product marketplace globally, so it makes perfect sense that the wild growth in advertising continues to grow at high rates.\nWe still have the optionality in gaming, the growth in prime ARPUs, the Audio and Video division, in short, numerous segments that have not yet started to contribute sales and Amazon is currently trading at about 35x normalized FCF, expensive? In our opinion considerably cheaper than the multiples at which the market is trading.\nProduct\nAmazon is a company that has always had a long-term focus. This means that since its inception, it has renounced short-term profitability to become one of the most important companies in the world in the long term. There is no doubt that it has achieved this goal and we are right at the moment where Amazon is beginning to reap what has been sown for so many years.\nIn its early days, Amazon focused on the user experience when shopping online. Amazon offered a simple, accessible and universal way to buy products to guarantee the highest number of reviews and arrive in record time. In addition, acquiring a product on Amazon carries the guarantee of delivery of the same; this means that if you have any kind of problem with the reception of the product, Amazon solves it in record time.\nThis first phase has been very successful and has been the foundation of Amazon 2.0, which has been integrating more and more services and improving its original product: e-commerce. This image summarizes very well the evolution of Amazon from a Prime 1.0 to a Prime with a much higher added value.\nThanks to this user experience created by Amazon, it has been one of the main contributors (or rather the main contributor) to the explosive evolution of e-commerce, making its penetration increasingly higher and its growth very high.\nAccording toStatistadata, e-commerce penetration worldwide is 50.8% in 2021 and is expected to reach 63.1% in 2025. Average spending per person exceeds $700 per year. Between 2020 and 2025, e-commerce revenues are expected to grow by 50%, so far from being a mature market, it is still growing strongly.\nAmazon Prime\nWe all know what this service entails, so I am not going to explain it at length. More and more new services are being integrated into Amazon Prime, making it one of the must-have subscriptions for users.\nA chronological summary of Amazon's evolution in the US (its most mature market) is essential to understand the evolution of prices and value-added over time.\nAmazonlaunches Prime subscription in the US in 2005for $79 per year. In 2006, Amazon moved forward and launched Fulfilled by Amazon. This service allows sellers to have a store on Amazon and ship their products for a fee. These products then become eligible for Amazon Prime, increasing the assortment and selection available to customers.\nStarting in 2011, Amazon included Prime Video in subscriptions, which meant 5,000 movies and series for every subscriber.\n2014 was a great year for Prime, not only because there were many new services added, but also because there was the first price increase, Amazon raises from $79 to $99 the subscription in the U.S. This same year Amazon Prime Pantry is launched, offering customers the ability to buy essential supermarket products (toilet paper, drinks, creams) for a meager fee and regularly. Also in 2014, Amazon Music was launched with the Prime subscription, giving access to a catalog of 60M songs, on a par with the best streaming services. Amazon photos are also launched, a service that offers high-resolution photo storage with Amazon's own subscription. Finally, Amazon launches; Amazon Now, a supermarket service in which you receive your products in 2 hours (or one in certain areas) with free shipping cost from $ 50.\nIn 2015 Amazon Prime Day was created to celebrate the 20th anniversary, in which 24 hours offers to appear to be the day of Amazon's biggest sale since its launch.\nIn 2016, same-day delivery to 27 metropolitan areas was introduced. Prime also joins Prime, Prime Reading, which offered more than 1,000 books and magazines free of charge.\nIn 2017, an agreement was formed with Chase to create a credit card that offers Prime subscribers at no added cost a 5% cash back at Amazon or Whole Foods for purchases made. Prime Wardrobe is also launched in 2017, a service that allows you to try on clothes, jewelry or similar in a period of 7 days before having to pay. That same year Amazon Key is launched, a smart lock that allows opening the home from the Smartphone to trusted people (seeing through an integrated camera), open the door from your own Smartphone or with a personal code. In addition to this, it allows Prime members to receive Amazon packages in their garage, house, without needing a key, simply through the APP.\nIn 2017, the acquisition of Whole Foods was made, which is integrated into Amazon with discounts, free shipping or cashback when paying by card.\nIn 2018 comes a second price increase from $99 to the current $119, an increase of $40 since its launch in 2005.\nIn 2019, Amazon Fresh launched Prime subscribers, offering free in select cities fresh grocery delivery service.\nFinally, in 2020 Amazon Prime Gaming is launched, a service built into the Prime subscription that provides free games, exclusive gaming content and a free Twitch subscription.\nThe evolution of Prime has been impressive, incorporating new services year after year to make Amazon's subscription indispensable in our lives. Seeing the evolution in subscribers, it seems evident that it has achieved its purpose.\nPrime's evolution has taken us to200M subscribers in 2020globally of which 153M are from the US.\nSource: Emarketer, Statista\nGiven the penetration, Prime's growth has slowed down in recent years, although users are becoming more and more accustomed to the service and it is becoming one of the essential subscriptions. This in our opinion, will lead to pricing power, something we have already seen in the United States, where the price for the subscription is substantially higher than the international subscription.\nBelow is a comparison of subscription costs in different countries:\nPrices have risen compared to2018(these are as of year-end 2020). It is expected that prices will continue to rise gradually to generate higher earnings per user (ARPU).\nThe first thing we notice is that the disparity between countries is high. In my opinion, where there is more room for prices to converge is in Europe, as Prime becomes more mature and incorporates higher quality content (as it has done in the US). This table shows that there is still a long way to go in terms of ARPU. Even in the US the price of an Amazon Prime subscription, taking into account everything included (music, video, access to Pharmacy, free shipping, storage), is well below other comparable subscriptions.\nPenetration in the United States is at its highest, 77% of people who buy on Amazon are Prime users. In 2020 this percentage was 67% so we have substantial growth; in fact it is one of the highest growth rates in the last decade.\nThe Prime user is more profitable since he/she tends to spend 2-3 times more per month than a non-Prime user. In e-commerce, Amazon is the clear dominator with amarket sharein the United States of more than 50%. Being the clear dominator in a market thatwill grow at double digitsfor the next 5 years (probably also for the next 10 years) is undoubtedly very interesting. Another important point is that retail is a huge market where Amazon is just scratching the surface but has certainly positioned itself to capture more and more market share as the years go by. Amazon has only9% ofUS retail sales, while Walmart has 9.5%. To give you a sense of Amazon's traction, in 2019 it only had 6.8%. Although it is clear that COVID has helped it gain traction, over the years it has always been gaining more market share. Amazon knows this and is substantially increasing fulfillment CAPEX.\nThe maturity of the Prime subscriber is also something important. As the years go by the Prime subscriber tends to consume more, so we could say that even a Prime subscriber has a rump-up period as we can see in this graph:\nIn certain markets such as India, where Amazon has focused a lot of attention and investment, Prime membership growth has been exceptional. According to the head of Prime in the country, Prime membership has doubled between 4Q17 and 2Q19. While some of that growth may have been driven by Amazon's material investment in local digital content and Prime rate incentives, we believe many of these members will become more engaged retail customers as their financial situation improves over time.\nThere are doubts about whether the momentum resulting from COVID in e-commerce will slow down with the reopening of e-commerce. Data from the first quarter of 2021 (with a reasonable reopening) shows that far from slowing down, growth has even accelerated above pre-COVID levels. This makes sense as certain users are reluctant to shop online and have been relatively forced during the quarantine. Having made purchases online has allowed them to lose that fear and become e-commerce users that would have taken longer to become so had it not been for COVID.\nCurrently, 66% of GMVs (Gross Merchandise Value or total amount transacted in resales without discounts) come from the United States, the most mature market. In the future, the projection is that the mix of GMVs between US and Non-US will converge to 50% since it is in the rest of the markets where growth is currently highest.\nMarket penetration is gradual and to get an idea of how it is evolving; we must look at the most mature market: the United States.\nCurrently, 67% of U.S. households with internet have a Prime subscription.\nFulfillment by Amazon (FBA)\nMore than half of the units purchased on Amazon's global marketplaces are sold by third-party merchants: sellers large and small who benefit from having access to Amazon's millions of customers. Your Seller Care business enables you to offer a wide selection of products by engaging these sellers and helping them manage their business on the platform.\nFulfillment by Amazon (FBA) is a program that allows sellers to ship their inventory to Amazon's distribution centers, where they create, pack and ship orders for them, as well as handle customer service and returns for them. Their products become part of the Prime program, so they reach an even larger audience, and the seller spends fewer resources on inventory management and shipping.\nFBA started in 2005 with just a handful of vendors. Teams of business and technical professionals build all the systems that enable it, including tools that provide real-time data and reports and allow companies to manage their inventories remotely and from any device.\nThe fulfillment part benefits from operational leverage, managing to contain unit costs and generating a higher and higher free cash flow. To understand the service in greater depth, we can look at Amazon's FBA service fees to third parties, which occupy almost 50% of the GMVs.\nAmazon has been investing in its fulfillment network for many years, reinforcing its increasingly evident MOAT regarding logistics capacity and customer experience. So high has been the deployment of Capex that today it even rivals companies whose core business is precisely that:\nSource: Annual report, FactSet estimates\nWith the scale that Amazon has acquired, it would not be unreasonable to become a more efficient logistics platform than even pure competitors.\nThe graph shows how the simplest route an order can take is directly from the seller to the buyer through a third-party service, where Amazon never actually touches the product, only puts the Marketplace.\nFor orders that do go through Amazon's network, the company groups inventory into three different categories:\n\nSmall classifiable: consumer items that make up the majority of the business. These are everyday items such as books, video games, and small-weight items.\nLarge sortable: Items with a higher weight may require more manual systems due to their size.\nLarge unsortable: Items that due to their size or weight, are handled with less automation, often in different locations and require more specialization for their preparation, such as specific packaging. Most of these shipments are delivered by third parties, mostly XPO.\n\nSmall and large collection and packaging facilities are usually located in the same building but separate divisions.\nA key defining characteristic of small and large sortable items is that they can fit into a box placed on a conveyor belt for automatic sorting.\nIntuitively, small sortable items are also where the company has implemented the most automation, including robotic picking functionality.\n2013 was a turning point for FBA. We are talking about the 1,050 fulfillment network points today; only 58 were open before 2014, or 5%. Before 2014 there were no airports; there was hardly any infrastructure compared to today. 2020 is once again a turning point; 45% of fulfillment centers have been or will be built after 2020.\nThis has undoubtedly been reflected in the 2020 CAPEX, which has risen considerably compared to previous years, from 5% to 9%. Excluding the increase in 2020 CAPEX, annualized growth since 2013 is 37%, above sales growth. Not all of this growth is due to fulfillment. Still, reading the letters from management, it is clear that a large part of this growth comes from this division, saying that the costs associated with \"last mile delivery\" had increased substantially.\nThis Capex is reflected in the evolution of the square meters of fulfillment:\nGrowth in line with all of the above.\nAmazon is also increasing its aircraft fleet, which started in 2016 following the agreement with ATSG and Atlas Air to lease 40 aircraft (20+20). Currently, the fleet of aircraft under lease is 82 plus 11 owned aircraft, a total of 93, so it has more than doubled the fleet in less than 5 years. These movements make clear Amazon's intentions to boost the air service. If it continues simultaneously, we would have about 200 aircraft in 2016 between leasing and ownership.\nIn the following image, we can see Amazon's air gateway network, with its usual spans. The network represents a key piece of the company's proprietary distribution network that has not been replicated by any other retailer and is a key function that allows Amazon to operate without the networks of third-party carriers.\nSource: Chaddick Institute\nIn Europe, it also has a network in the main capitals: Madrid, Barcelona, Paris, Milan, Rome, Cologne and Leipzig.\nThe current gap in the fleet is significant concerning UPS and FedEx, but Capex is deploying Amazon would not be surprised to have a similar fleet by 2030.\nAnd all this for what? Considering how much Amazon is spending on logistics, it's clear it has a purpose. FBA sales went from $1b in 2011 to $40b in 2020, a significant jump. Rumors indicate that Amazon would like to start competing with UPS and FedEx in offering their services not only for its Marketplace but also for third parties. This may be indicative of the program launched in 2017 \"Seller Flex) which is a variant of the FBA program but in-house. This means that you can leverage Amazon's logistics tools without having to deposit inventory in Amazon's fulfillment centers. This is already a very similar service to that provided by pure shipping players.\nFollowing the launch of FBA Onsite, Amazon began internal testing of Amazon Shipping, a third-party shipping service that complemented FBA onsite. Early on reports suggested that Amazon would be able to undercut third-party carriers by leveraging the capacity it already used for its own deliveries and eliminating added costs. After more than two years, Amazon Shipping remains an internal trial put on hold by the arrival of COVID, as Amazon itself needed all of its logistics capacity for internal use.\nIs there really an opportunity here? Let's look at the sales and operating profit of the main players: UPS and FedEx.\nBetween them they generate 40% of Amazon's sales and 53% of operating profit. Obviously, Amazon will not capture all the business from both, but it gives us an idea that it is a large market that can provide incremental sales for Amazon.\nConsidering all the opportunities on the table: Pharmacy, Grocery, Gaming, Advertising) Amazon Shipping will likely be delayed for a while, not one of the most immediate priorities. The deployed Capex itself serves for internal use with much more intense value chain control.\nWe can really see the benefits of that CAPEX for fulfillment in the gross margin. The cost of sales is associated with Amazon's shipping costs, both in-house and through third parties. As in-house shipping has been gaining scale through CAPEX deployment, the gross margin has been increasing, and this is entirely normal given that this segment is pure volume. This means that a company that does not move Amazon's volume will not be compensated for the Capex deployed by Amazon. Still, on the other hand, a company like Amazon that increases the number of shipments in double digits year after year shows that the higher the volume, the higher the cost savings per shipment that the CAPEX deployed will compensate. This is a key point, as Amazon has a greater weight in own shipping and less in third parties, it will acquire a higher gross margin because the cost of own shipping is significantly lower than using a third party such as UPS or FedEx.\nAWS\nWe believe that AWS will continue to be the dominant player in IaaS/PaaS as it captures most of the future growth in the industry due to its huge customer base.\nThere should be plenty of growth opportunities for all three vendors. Gartner's forecast for IaaS and PaaS implies a 25% revenue CAGR between 2020 and 2023 and a market of nearly $200 billion by 2023.\nAs for margins, they have danced between 20-30% despite aggressive pricing plans with a total of 20 discounts between 2018 and 2020 and so far 1 in 2021. The drop in margins in 2019 was due to an increase in investments for sales and marketing issues, which was only a short-term issue.\nAmazon is the clear dominator in the cloud market and although it has lost market share in recent years, this has not prevented it from growing at very high rates. What's interesting? The expectation is that thecloud marketwill grow from 2020 to 2025 at a compound rate of 17.5%. Considering that it is currently the company's division with the best margins, this is great news for Amazon's future.\nAmazon'sbacklogis accelerating its growth; we talk about the last year has grown more than 50% YoY while AWS sales growth is more in line with 30%. The backlog is contracts with an average maturity period of 3 years that end up materializing in sales, so seeing the rate at which it is growing is certainly very interesting.\nBacklog contracts are usually with large companies to whom they make offers with consequent price cuts. AWS is being aggressive but can afford to be given the margins it operates on.\nThe backlog currently exceeds $50b, which should materialize over an average period of 3 years. This will be AWS sales but does not mean that these are the only sales that will materialize as there will continue to be growth in shorter-term contracts as at present.\nSource: Annual Report & Morgan Stanley Estimates\nThis graph shows exciting data. As I mentioned, the backlog has accelerated its growth while sales per se have been maintained (the last quarters). In the medium term, both curves will tend to converge.\nSupermarket\nThe supermarket sector is gigantic and today, Amazon's US market share in this segment is less than 3% of 2020 sales. Considering that Amazon's penetration in this segment is increasingly higher and that Amazon is learning more and more due to the integration of Whole Foods and the opening of Fresh, Go stores and above all, physical locations.\nThe opening of the first Amazon Fresh store in California is very recent; we are talking about September 2020 and from that date until May 2020 the number has risen to 12. Considering the pace of openings, it is clear that Amazon wants to focus on an Omnichannel model where you can buy physically or online, whichever best suits your needs at any given time.\nAmazon stores average 35,000 feet in size, selling about $754 per foot, in line with comparables such as (Wegmans, Kroger, Ahold) so the pace of Amazon's store rollout will mean interesting incremental sales (depending on the number of stores)\nOn the other hand Amazon is focusing on the consumer experience.Amazon Dash Cartis turning the shopping experience into something totally different. It will have a small initial learning curve for the consumer, but it substantially improves the supermarket shopping experience once the concept is understood. We are talking about a supermarket cart with intelligence to account for every product you put inside automatically. You can leave with the purchase without having to go through the checkout or similar, and to all this add, it lets you know how much you have spent at each moment, making the experience much more efficient.\nTherefore Amazon offers an omnichannel experience in which you can buy online and receive same-day delivery for free (on orders over $50 for prime users). You can also place the order and pick it up at the store or simply buy it in the store itself; let's say it's a similar approach to Inditex.\nHaving the ability to do click & collect or simply order to home delivery allows stores to leverage stores in various ways that will generate operational leverage and increased margins as order volumes increase.\nThe current trend is towards healthy food and in Amazon Fresh Stores, there is ample space for fresh and prepared food; we have space for fresh seafood, a sushi bar or even fresh pizza in the supermarket itself.\nReviews of the Amazon Fresh stores on google are very positive, with an average of 4.3 stars across all 12 locations and over 3,000 votes.\nIn a survey conducted by UBS in its 7th annual eCommerce survey, all respondents were asked the main reasons for buying online. With 43% of the answers, the most chosen was the convenience and comfort of doing it. It was a key point for the penetration to continue increasing since it is not because of something temporary such as prices, greater selection, but because of something structural.\nOn the opposite side, reasons for not buying online would be in the first position with 45% \"I prefer to see and touch the product.\" Another main reason is that it is easier to buy physically and this can be key, making online shopping more accessible with improvements to the process itself.\nTo get an idea of how the Amazon Groceries process works we have the following scheme:\nLooking at the schematic, it is easy to understand how Whole Foods fits into the process. Having incorporated physical stores, they serve as a logistics hub for shipments, allowing Amazon to improve efficiency.\nIn addition to being focused on all the aspects mentioned above, Amazon has also been concerned about generating its own brand, where margins are higher. An example of Amazon's own brands can be seen below.\nEspecially in the last few years (since 2017), Amazon's own brand has been significantly boosted. We talked about that in 2017 there were less than 20 Amazon own brands and very few products for sale. Currently, it has more than 120 own brands and 22,617 available. In addition, Amazon's own brand has an average of 4.3 stars reflecting consumer satisfaction levels.\nAmazon Ads\nThis is one of the biggest surprises and most undervalued assets that Amazon currently has. Advertising revenue is a source of income that is growing at an accelerated rate; we are talking about the fact that only 5 years ago, it was non-existent and now it is doubling every two years:\nThis evolution makes sense, considering that Amazon is the most powerful showcase globally to sell products, so being able to appear in the top positions is undoubtedly something very interesting for products. We are talking about a gigantic market where Amazon is just scratching the surface.\nConsidering the advertising spending of listed defensive consumer companies, we can get an idea of the size of this market, where Amazon has not yet monetized practically anything. Proof of the potential is simply to look at the growth in sales over the last few years, which gives us an idea of what is behind this market.\nAdvertising continues to shift to digital, and according to eMarketer, online advertising will account for approximately 64% of total advertising by 2024. This makes sense considering that it is much more direct advertising and reaches the consumer better than traditional media (TV, radio).\nAmazon within digital advertising is the greenest, in earlier stages while Google and Facebook are already much more mature advertising platforms.\nIt is undoubtedly effective advertising, do we have doubts that it is a boost in sales to appear at the top of the most important Marketplace in the world? We certainly do not. We believe that it is a part of income that makes a lot of sense and will grow exponentially. The structure of Amazon searches is usually as follows:\n\nAmazon Healthcare\nAlthough you find little more than a footnote about the Healthcare part of the business in Amazon's accounts, Amazon and TAM's plans for this segment are very strong. In November 2020Amazon Carewas approved in WA and will be present in 50 states by the summer and enable the distribution of prescription drugs, opening up a range for exciting new revenues.\nAmazon Care is Amazon's online clinic, which is expanding staff from the end of 2020. Amazon care launches as an internal trial (many Amazon divisions are born this way) in autumn 2019, offering a virtual medical clinic to employees to facilitate access to high-quality primary care online (although home visits are available in some areas). This initiative makes perfect sense in the United States, where healthcare is not universal and health insurance is expensive.\nWith Amazon Care you also have urgent care through its application; the services offered by the application are:\n\nMake an appointment\nIn-person follow-up care (select states only)\nMedical examinations\n24/7 service team, 365 days a year.\nRecipes delivered to your home.\nVaccines.\nVirtual consultation.\n\nWithin the application itself you have Care Chat, a chat that allows you to connect with registered nurses to get advice on health problems.\nAmazon intends to offer this service to independent companies seeking to provide this service for their employees and families. This segment will take time and where it is necessary to have a long-term vision, although the potential is certainly high.\nAmazon is interested not only in the pharmacy business, a B2C business but also in the B2B segment of medical device distribution, which would save a lot of paperwork for hospitals as it is a more direct distribution agreement that could save administrative procedures such as GPOs.\nConcerning the pharmacy side, it is clear that Amazon fits mostly into the hybrid physical plus online presence, emphasizing the online side.\nThe combination of Whole Foods + Amazon and Prime Now is powerful for this approach and Amazon already distributes many pharma products. However, I expect a substantial increase and greater efficiency (in terms of delivery times in Europe) in adding new products to the platform.\nIt is clear that Amazon is interested in the points mentioned above and this is reflected in its chronological evolution:\n\nIn 2018 Amazon launches its own brand: Basic Care.\nIn 2018 it acquired an online pharmacy: PillPack, which operates with a digital license in 49 states covering 90% of American households.\nLate 2018 reported talks with startup Xealth and the hospital network to allow doctors to purchase medical devices.\nReported in 2018 negotiations to buy MedPlus a company with 1,400 pharmacy outlets in India.\nSeptember 2019 launches Amazon Care.\nB2B growth has been more than x10 since 2016.\nMarch 2021 national expansion of Amazon Care to begin in the summer of 2021.\nLaunch of Amazon Pharmacy in 2020.\n\nSelling pharmacy products with the Whole Foods combination allows for 2-hour delivery in the USA, which is very interesting thanks to Amazon's logistical features.\nAmazon has been taking steps in this direction for a few years and the most complicated part, which is to establish the infrastructure, is already more than done. Right now, Amazon can sell in the U.S. both online and via \"mail,\" the two most widely used, so its entry into this segment is already complete:\nThe final launch ofAmazon Pharmacycame in November 2020 through which prescription drugs will be available. It is currently approved in 45 states which means covering 90% of the American population. Amazon Pharmacy has a proposal to save 80% on generic and 40% on brand-name drugs when you do not pay with insurance and compare the price you get on Amazon with that of another possible distributor.\nFor any user who does not have insurance, currently, the prices offered by Amazon are the lowest. Those Prime users on Prime RX will receive discounts between 40-80% with deliveries of less than 2 days (free delivery).\nThe Amazon Pharmacy market is gigantic; we are talking about a market that moves more than $350b a year where two-thirds are distributed in retail and one-third via mail. Amazon is already able to reach the retail market and is working on reaching the mail order part, as this is a different market that usually works for chronic ailment drugs on autopilot.\nAn important point provided by Amazon Pharmacy is the collection of user data. As an online registry, you have the data of the profile of medicines that a certain person consumes, so this information is precious for certain players.\nThere are currently three Amazon pharmacy services:\n\nAmazon Pharmacy:allows customers to order prescription drugs for home delivery. Orders are delivered in discreet packaging to the customer's preferred address. Medications require a prescription from a licensed health care provider.\n\n\nPillPack by Amazon Pharmacy:part of Amazon Pharmacy and remains a distinct service for customers taking multiple medications daily for chronic conditions.\n\n\nAmazon Prime:Offers Prime members access to low prices on many brand names and generic prescription drugs when paying without insurance. It can be used to get discounts of up to 80% on generic drugs and 40% on brand-name drugs at more than 50,000 participating pharmacies nationwide, including Amazon Pharmacy and the PillPack by Amazon Pharmacy service.\n\nUnderstanding where Amazon is positioned, the opportunity is enormous:\n\nRetail sale of medicines\nB2B sales of medical devices\nOnline medical care.\n\nGaming and Twitch\nAmazon has made several 2014 acquisitions related to gaming; the chronology would be as follows:\n\nIn 2014 Amazon acquires Doublé Helix Games.\nAlso in 2014, Amazon acquired Twitch.\nIn 2016 it launched a tool: Lumberyard that enables game development.\nIn 2016, it acquired the online gaming portal \"Curse.\"\n2018 acquires GameSparks.\n\nOf all the acquisitions made, absolute reality is twitch, achieving spectacular user and viewing metrics and wild growth.\nThe future lies in the cloud and subscriptions, as well as in in-game purchases. Console and game sales have been flat for a few years or with fragile growth, and it is the subscription, cloud and multiplayer, and in-game purchases that have been growing.\nIn the future, it is foreseeable that this trend will accelerate with cloud gaming being the clear dominator and console sales declining at high rates, so positioning in this segment will be key to absorb sales in the form of subscription: PlayStation Now, GeForce Now, Stadia.\nDistribution has already changed a lot but from now on the changes are expected to intensify. In the past, the Publisher published the game on the platform or console and the platform or console delivered it to the consumer.\nThe new distribution will start from the cloud so that the relationship will start from Azure, AWS or the corresponding player. The broadband provider will come into play and finally, the corresponding cloud platform (Stadia, PlayStation Now...). In this part, there will clearly be a strong growth and where everything remains to be done and positioned.\nMusic and Video\nThe $8.45 billion acquisition of Metro Goldwyn Mayer(NYSE:MGM)is significant for Amazon, the company's second-largest acquisition after the $13.7 billion Whole Foods deal in 2017, but representing just half of 1% of AMZN's market capitalization.\nThrough the acquisition, AMZN gains access to MGM's extensive library of more than 4,000 films, including notable franchises such as James Bond, Rocky and Tomb Raider. AMZN also acquires 17,000 television programs, including series (Fargo, The Handmaid's Tale) and shows (Shark Tank, The Voice).\nMGM accumulates more than 180 Academy Awards and 100 Emmys. Overall, the MGM deal should allow Amazon to create a more compelling Video offering to attract new subscribers for the Prime ecosystem. The great advantage of streaming and Prime subscription is that it is a business of scale where MGM's acquisition costs are diluted the broader the user base, which is enhanced by this acquisition.\nWith 175M users on Prime video and 200 on Prime, this acquisition will possibly catalyze to create new subscribers.\nMGM's content is important and the intellectual property acquired by Amazon, which will allow it to produce more original and exclusive content, which will allow it to compete in a more relevant way with Netflix and Disney.\nWe do not rule out that there may be more acquisitions on the video side. The larger the subscriber base, the higher the acquisition costs are diluted over a higher base, positively feeding back into the Prime ecosystem.\nAs for the price, it is clear that it has not been a cheap purchase, although the important thing is what its integration means more than what MGM currently generates. We are talking about 25x EBITDA, which is in the highest range of M&A in the average sector. It is understandable considering the current valuations in the markets; of course these have not helped the price to be \"cheap.\" From a broad point of view the integration makes sense in the ecosystem that Amazon is trying to create with Prime.\nWhen it comes to integrating MGM into Amazon, an important question arises: Is Amazon going to do without the 60% of MGM's revenue generated from content licensing? Is it not going to do without it?\nIn the first case, it would become exclusive content of Amazon, generating more value for Amazon Video; in the second case it would not contribute much value to Amazon Video considering that it would not be exclusive content.\nVenture Capital\nAmazon allocates a small part of its cash to investments in startups and although it is not transparent about this, we do know the intentions of these investments.\nThe Amazon Alexa Fund (200M) has a focus on integrating health issues into the home by investing in startups such as Aiva (a virtual assistant that connects seniors with their healthcare service), Tonal (artificial intelligence for home fitness) and Zwift (a virtual cycling app).\nIt has recently launched another fund that will invest in Indian startups, mostly related to Healthcare fabrics.\nRisks\n\nCovering too many different products or markets: The bets on Amazon Music, Amazon Video and the like, at the moment do not have too much of a view to succeed. Amazon's purpose indeed is to offer an attractive package, not the product separately.\nBezos' departure should not affect too much considering the company's size, but it is clear that he has been a key figure in Amazon's evolution.\nRegulation. A company of Amazon's size will always face regulatory risks.\nA slowdown in AWS is currently driving operating profit.\nThat all the optionality of new business lines does not end up fitting.\n\nWaymo, although it may not seem like it, is a threat to Amazon. The number of miles traveled by Waymo is increasing and its development is becoming more mature.\nGoogle with its powerful search engine could create an interesting combination with the shopping part in which you buy through Google, the retailers have the inventory and the logistics are Waymo itself delivering the product autonomously in a short period of time:\nAmazon has been working for years on drone delivery and making deliveries increasingly efficient, so it has been protecting itself from this potential latent risk for years.\nIn the end Amazon wants the process to be as follows:\nWorking Capital\nTo understand Amazon's FCF, it is important to talk about Amazon's working capital changes, as these are very peculiar. The first quarter is always very negative, penalizing the CFO. The following quarters the Working Capital changes neutralize the effect of the first quarter, bringing cash flow to Amazon. This happens mainly because at the end of the year there are many pending payments to suppliers and expenses to be settled, so that at the beginning of the year when these accounts are settled, the changes in working capital are very negative, hurting Amazon's operating cash flow.\nProfitability\nAmazon's profitability has varied substantially as they have started investing aggressively in the business and growing their assets and capital employed considerably. We are talking about an 80-fold increase in assets since 2006, which reflects the lines I have previously discussed.\nAs margins are expanding, the path of improving return on assets and capital employed has returned, with ROCE currently at 20%, ROE at 23% and ROA at 7%. Undoubtedly, these are levels that indicate that Amazon is a quality company. As a note, Amazon is in a period of intensive investments and with a clear potential for margin expansion in the future, so it would be foreseeable that these metrics will continue to rise.\n\nValuation\nAmazon is a complicated company to value because of its size and the point at which it finds itself; large investments and very high margin expansion potential.\nIt currently trades at around 60x EV/FCF. Still, if we normalize both Working Capital and Capex (it has increased from 5% of sales to 9%), we would be talking about 35x EV/FCF for a company with very high quality and with most of the divisions only scratching the surface of their potential.\nJust by looking at the multiples, we could already say that it is reasonable considering the prospects and position of the business.\nIt currently trades at about 36x EV/FCF, below its average EV/FCF multiple considering a normalized WC and normalized CAPEX. This already gives us an idea that it can be a company to consider as Amazon today is a much stronger business than 10 years ago.\nIf we project sales and FCF assuming conservative assumptions and normalizing both Cash Flow and Working Capital we obtain the following estimates:\nUnder these assumptions, we performed a valuation by multiples and DCF:\nWe would be buying Amazon at a reasonable price without assuming that any of the above optionalities explode, so the margin of safety is wide even though the upside is tight.\nConclusion\nAmazon is a company that is reaping the rewards after decades of sowing. These are the years where surprises start to emerge, margins start to expand, and more optionality starts appearing. Having the opportunity to acquire a company of this quality at a \"reasonable\" price is one of those opportunities, from a profitability-risk point of view, that in the long term make the difference.\nIt is important to closely follow the evolution of the different segments and the optionality associated with them and the ARPUS of the international segment since it is the one with the greatest potential.","news_type":1},"isVote":1,"tweetType":1,"viewCount":484,"authorTweetTopStatus":1,"verified":2,"comments":[{"author":{"id":"3583109252998837","authorId":"3583109252998837","name":"oddox","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":2,"crmLevelSwitch":0,"idStr":"3583109252998837","authorIdStr":"3583109252998837"},"content":"I want to buy but it's too extensive for me ?","text":"I want to buy but it's too extensive for me ?","html":"I want to buy but it's too extensive for me ?"}],"imageCount":0,"langContent":"EN","totalScore":0},{"id":160160462,"gmtCreate":1623775096756,"gmtModify":1703819179399,"author":{"id":"3574558286837472","authorId":"3574558286837472","name":"Mxtinhzq","avatar":"https://static.tigerbbs.com/c915c3b8303c6bd800f52c911a79390f","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3574558286837472","authorIdStr":"3574558286837472"},"themes":[],"htmlText":"Too much Nio noises what about Xpeng? It’s doing just as well. Rooting for Xpeng","listText":"Too much Nio noises what about Xpeng? It’s doing just as well. Rooting for Xpeng","text":"Too much Nio noises what about Xpeng? It’s doing just as well. Rooting for Xpeng","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/160160462","repostId":"1146386859","repostType":2,"repost":{"id":"1146386859","kind":"news","pubTimestamp":1623417074,"share":"https://ttm.financial/m/news/1146386859?lang=&edition=fundamental","pubTime":"2021-06-11 21:11","market":"us","language":"en","title":"NIO: Buy This Chinese EV Manufacturer While It's Still Cheap","url":"https://stock-news.laohu8.com/highlight/detail?id=1146386859","media":"seekingalpha","summary":"NIO is a dominant EV manufacturer in the electric SUV segment in China.Despite competing in the luxurious SUV segment, its cars are more affordable in comparison to the cars of its peers such as Tesla.As the Chinese EV market will continue to aggressively expand in the upcoming years, we believe that NIO has all the chances to create additional shareholder value in the future.Founded in 2014, NIO is an electric vehicle manufacturer that's headquartered in Shanghai, China. The company mostly spec","content":"<p><b>Summary</b></p>\n<ul>\n <li>NIO is a dominant EV manufacturer in the electric SUV segment in China.</li>\n <li>Despite competing in the luxurious SUV segment, its cars are more affordable in comparison to the cars of its peers such as Tesla.</li>\n <li>As the Chinese EV market will continue to aggressively expand in the upcoming years, we believe that NIO has all the chances to create additional shareholder value in the future.</li>\n</ul>\n<p>NIO(NYSE:NIO)is a dominant EV manufacturer in the electric SUV segment in China. It has been constantly increasing its deliveries every quarter, its revenues have been growing at a triple-digit rate in recent years, and despite competing in the luxurious SUV segment, its cars are more affordable in comparison to the cars of its peers such as Tesla(NASDAQ:TSLA). While NIO's stock has depreciated last month, there's every reason to believe that its growth story is far from over, as the Chinese EV market will continue to aggressively expand in the upcoming years and the penetration of electric vehicles on its roads is only going to increase. Considering this, the company has all the chances to create additional shareholder value in the long run.</p>\n<p><b>Dominating the Chinese Market</b></p>\n<p>Founded in 2014, NIO is an electric vehicle manufacturer that's headquartered in Shanghai, China. The company mostly specializes in the development of luxurious electric SUVs and just likeXPeng(XPEV), it manufactures and sells its cars online and through its showrooms across China. In addition, NIO also offers various energy-related solutions such as home charging stations, mobile charging services, and others to its customers.</p>\n<p>In recent years, the company has been aggressively growing, as the deliveries of its cars have been steadily increasing quarter after quarter, which led to the appreciation of its stock. However, due to the overall market selloff last month, NIO's stock along with stocks of other EV manufacturers such as XPeng, Tesla, and Li Auto (LI) evaporated most of its YTD gains and are currently underperforming the S&amp;P 500 Index.</p>\n<p><img src=\"https://static.tigerbbs.com/23b2ed509a529a876c423f3e9426be3f\" tg-width=\"1280\" tg-height=\"443\" referrerpolicy=\"no-referrer\"></p>\n<p><i>Chart: Seeking Alpha</i></p>\n<p>Despite this, there's every reason to believe that NIO's stock will recover, as the company's successful performance in Q1 shows that its growth story is far from over. InQ1alone NIO beat the Street expectations by $160 million and generated $1.22 billion in revenues, which represents an increase of 481.8% Y/Y. In addition, the company's gross profit was $237.3 million, while its vehicle margin was 21.2% against -7.4% a year ago. During the period, NIO has also improved its bottom-line performance, as its net loss was only $68.8 million, and despite the chip shortages and the Chinese New Year its deliveries have also increased by 422.7% Y/Y and by 15.6% Q/Q to 20,060.</p>\n<p>One of the best things about NIO is that it already has a dominant position in the Chinese EV industry and it also has a solid balance sheet, as its cash reserves at the end of Q1stoodat $7.2 billion, while it had only $1.59 billion in long-term debt. As a result, it can easily reinvest its resources back into the business to drive growth and establish an even stronger foothold in its home market without worrying too much about the current losses.</p>\n<p>On top of that, while some might say that by trading at a price-to-salesratioof ~13x NIO is overvalued, the reality is that its momentum is not slowing down and there's every reason to believe that the growth story is far from over. Considering that even at the market cap of ~$70 billion NIO still trades below the Streetconsensusprice of $59.24 per share, it's safe to assume that the upside is still there, especially since the current forecasts suggest that the company will increase its revenues from $2.49 billion in FY20 to $8.81 billion in FY22.</p>\n<p><img src=\"https://static.tigerbbs.com/71905e5a90565b6a7e8864b3f6b0c226\" tg-width=\"883\" tg-height=\"382\" referrerpolicy=\"no-referrer\"></p>\n<p><i>Source: Seeking Alpha</i></p>\n<p>At this stage, the major competitor of NIO's flagship SUVES8is Tesla's Model X. However, there are several reasons to believe that the ES8 is a more attractive car in comparison to the Model X, and as a result, NIO has all the opportunities to outsell its competitor in China in the long run. First of all, the ES8 has more legroom and headroom than the Model X, it also has a luxurious interior, and it comes with three different battery packages that could last from 415 kilometers to 580 kilometers on a single charge.</p>\n<p>All of the ES8 SUVs include a proprietary operating system, have advanced navigation software, and most importantly cost ~$70,000 per vehicle in China, which is below the cost of Tesla's Model X, which comes at a price tag of ~$110,000 per vehicle in the region. We believe that this pricing advantage will undoubtedly help NIO to outsell Tesla in the SUV segment, especially since its cars now could bepurchasedat a discount thanks to the new Chinese subsidy program.</p>\n<p>Another uniqueness of NIO is its battery as a service business model, which allows its customers to swap their batteries in various swapping stations around China if they don't want to charge their cars or are in a hurry. After recently deploying the second version of its Power Swap stations, the swapping of batteries is now done in under three minutes, which is the same as refueling a traditional ICE car, and a single station now could perform up to 312 battery swaps in a single day. NIO now has a network of charging stations across all of China and if the solid-state batteries won't be available by the end of the decade at scale, then the idea of swapping batteries on the go will remain a viable business model in the long run.</p>\n<p>Going forward, NIO plans to accelerate its deliveries this month in order to meet its Q2 goal of delivering 21,000 to 22,000 vehicles, which represents a growth of 103% Y/Y to 113% Y/Y and plans to generate $1.24 to $1.29 billion in revenues during the period. Despite the semiconductor shortages, NIO already managed to increase its deliveries in April and May to 7,102 vehicles and 6,711 vehicles, respectively, which represents a growth of 125% Y/Y and 95.3% Y/Y, respectively. On top of that, NIO is also on track to deliver 90,000 to 100,000 vehicles this year.</p>\n<p>Considering this, there's every reason to believe that NIO will continue to be a dominant player in the Chinese EV market and a leader of the luxury EV segment in the region. While the company doesn't have an infrastructure outside China, we don't think that's a downside at all since China is the biggest EV market in the world that's constantly growing and NIO has better chances of creating shareholder value there than abroad. For that reason, we believe that NIO's growth story is far from over and it's likely that as long as its deliveries increase with every quarter, its stock will be rising in value in the long run.</p>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>NIO: Buy This Chinese EV Manufacturer While It's Still Cheap</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nNIO: Buy This Chinese EV Manufacturer While It's Still Cheap\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-06-11 21:11 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4434085-nio-buy-this-chinese-ev-manufacturer-while-its-still-cheap><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nNIO is a dominant EV manufacturer in the electric SUV segment in China.\nDespite competing in the luxurious SUV segment, its cars are more affordable in comparison to the cars of its peers ...</p>\n\n<a href=\"https://seekingalpha.com/article/4434085-nio-buy-this-chinese-ev-manufacturer-while-its-still-cheap\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"NIO":"蔚来"},"source_url":"https://seekingalpha.com/article/4434085-nio-buy-this-chinese-ev-manufacturer-while-its-still-cheap","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1146386859","content_text":"Summary\n\nNIO is a dominant EV manufacturer in the electric SUV segment in China.\nDespite competing in the luxurious SUV segment, its cars are more affordable in comparison to the cars of its peers such as Tesla.\nAs the Chinese EV market will continue to aggressively expand in the upcoming years, we believe that NIO has all the chances to create additional shareholder value in the future.\n\nNIO(NYSE:NIO)is a dominant EV manufacturer in the electric SUV segment in China. It has been constantly increasing its deliveries every quarter, its revenues have been growing at a triple-digit rate in recent years, and despite competing in the luxurious SUV segment, its cars are more affordable in comparison to the cars of its peers such as Tesla(NASDAQ:TSLA). While NIO's stock has depreciated last month, there's every reason to believe that its growth story is far from over, as the Chinese EV market will continue to aggressively expand in the upcoming years and the penetration of electric vehicles on its roads is only going to increase. Considering this, the company has all the chances to create additional shareholder value in the long run.\nDominating the Chinese Market\nFounded in 2014, NIO is an electric vehicle manufacturer that's headquartered in Shanghai, China. The company mostly specializes in the development of luxurious electric SUVs and just likeXPeng(XPEV), it manufactures and sells its cars online and through its showrooms across China. In addition, NIO also offers various energy-related solutions such as home charging stations, mobile charging services, and others to its customers.\nIn recent years, the company has been aggressively growing, as the deliveries of its cars have been steadily increasing quarter after quarter, which led to the appreciation of its stock. However, due to the overall market selloff last month, NIO's stock along with stocks of other EV manufacturers such as XPeng, Tesla, and Li Auto (LI) evaporated most of its YTD gains and are currently underperforming the S&P 500 Index.\n\nChart: Seeking Alpha\nDespite this, there's every reason to believe that NIO's stock will recover, as the company's successful performance in Q1 shows that its growth story is far from over. InQ1alone NIO beat the Street expectations by $160 million and generated $1.22 billion in revenues, which represents an increase of 481.8% Y/Y. In addition, the company's gross profit was $237.3 million, while its vehicle margin was 21.2% against -7.4% a year ago. During the period, NIO has also improved its bottom-line performance, as its net loss was only $68.8 million, and despite the chip shortages and the Chinese New Year its deliveries have also increased by 422.7% Y/Y and by 15.6% Q/Q to 20,060.\nOne of the best things about NIO is that it already has a dominant position in the Chinese EV industry and it also has a solid balance sheet, as its cash reserves at the end of Q1stoodat $7.2 billion, while it had only $1.59 billion in long-term debt. As a result, it can easily reinvest its resources back into the business to drive growth and establish an even stronger foothold in its home market without worrying too much about the current losses.\nOn top of that, while some might say that by trading at a price-to-salesratioof ~13x NIO is overvalued, the reality is that its momentum is not slowing down and there's every reason to believe that the growth story is far from over. Considering that even at the market cap of ~$70 billion NIO still trades below the Streetconsensusprice of $59.24 per share, it's safe to assume that the upside is still there, especially since the current forecasts suggest that the company will increase its revenues from $2.49 billion in FY20 to $8.81 billion in FY22.\n\nSource: Seeking Alpha\nAt this stage, the major competitor of NIO's flagship SUVES8is Tesla's Model X. However, there are several reasons to believe that the ES8 is a more attractive car in comparison to the Model X, and as a result, NIO has all the opportunities to outsell its competitor in China in the long run. First of all, the ES8 has more legroom and headroom than the Model X, it also has a luxurious interior, and it comes with three different battery packages that could last from 415 kilometers to 580 kilometers on a single charge.\nAll of the ES8 SUVs include a proprietary operating system, have advanced navigation software, and most importantly cost ~$70,000 per vehicle in China, which is below the cost of Tesla's Model X, which comes at a price tag of ~$110,000 per vehicle in the region. We believe that this pricing advantage will undoubtedly help NIO to outsell Tesla in the SUV segment, especially since its cars now could bepurchasedat a discount thanks to the new Chinese subsidy program.\nAnother uniqueness of NIO is its battery as a service business model, which allows its customers to swap their batteries in various swapping stations around China if they don't want to charge their cars or are in a hurry. After recently deploying the second version of its Power Swap stations, the swapping of batteries is now done in under three minutes, which is the same as refueling a traditional ICE car, and a single station now could perform up to 312 battery swaps in a single day. NIO now has a network of charging stations across all of China and if the solid-state batteries won't be available by the end of the decade at scale, then the idea of swapping batteries on the go will remain a viable business model in the long run.\nGoing forward, NIO plans to accelerate its deliveries this month in order to meet its Q2 goal of delivering 21,000 to 22,000 vehicles, which represents a growth of 103% Y/Y to 113% Y/Y and plans to generate $1.24 to $1.29 billion in revenues during the period. Despite the semiconductor shortages, NIO already managed to increase its deliveries in April and May to 7,102 vehicles and 6,711 vehicles, respectively, which represents a growth of 125% Y/Y and 95.3% Y/Y, respectively. On top of that, NIO is also on track to deliver 90,000 to 100,000 vehicles this year.\nConsidering this, there's every reason to believe that NIO will continue to be a dominant player in the Chinese EV market and a leader of the luxury EV segment in the region. While the company doesn't have an infrastructure outside China, we don't think that's a downside at all since China is the biggest EV market in the world that's constantly growing and NIO has better chances of creating shareholder value there than abroad. For that reason, we believe that NIO's growth story is far from over and it's likely that as long as its deliveries increase with every quarter, its stock will be rising in value in the long run.","news_type":1},"isVote":1,"tweetType":1,"viewCount":80,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":160185205,"gmtCreate":1623774990207,"gmtModify":1703819175471,"author":{"id":"3574558286837472","authorId":"3574558286837472","name":"Mxtinhzq","avatar":"https://static.tigerbbs.com/c915c3b8303c6bd800f52c911a79390f","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3574558286837472","authorIdStr":"3574558286837472"},"themes":[],"htmlText":"<a href=\"https://laohu8.com/S/AAPL\">$Apple(AAPL)$</a>I sold my apple shares at $126 slow progress. Long term play.","listText":"<a href=\"https://laohu8.com/S/AAPL\">$Apple(AAPL)$</a>I sold my apple shares at $126 slow progress. Long term play.","text":"$Apple(AAPL)$I sold my apple shares at $126 slow progress. Long term play.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/160185205","isVote":1,"tweetType":1,"viewCount":160,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":365935831,"gmtCreate":1614688069823,"gmtModify":1704774024455,"author":{"id":"3574558286837472","authorId":"3574558286837472","name":"Mxtinhzq","avatar":"https://static.tigerbbs.com/c915c3b8303c6bd800f52c911a79390f","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3574558286837472","authorIdStr":"3574558286837472"},"themes":[],"htmlText":"Should have gotten baba at $220 when I stillhad the chance. Nonetheless still great stock to buy for the long haul","listText":"Should have gotten baba at $220 when I stillhad the chance. Nonetheless still great stock to buy for the long haul","text":"Should have gotten baba at $220 when I stillhad the chance. Nonetheless still great stock to buy for the long haul","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/365935831","repostId":"1169004570","repostType":4,"repost":{"id":"1169004570","kind":"news","pubTimestamp":1614687445,"share":"https://ttm.financial/m/news/1169004570?lang=&edition=fundamental","pubTime":"2021-03-02 20:17","market":"us","language":"en","title":"6 Reasons Alibaba Is Set To Soar And Too Cheap To Ignore","url":"https://stock-news.laohu8.com/highlight/detail?id=1169004570","media":"Seekingalpha","summary":"Rising interest rates have caused a modest dip in stocks, and a pullback in tech stocks. Some individual companies have fallen into bear markets.Alibaba represents one of the highest quality  hyper-growth blue-chips you can buy today. It began the tech pullback highly undervalued and is now 42% undervalued.Post earnings, when management updated analysts on regulatory risks, the LT growth consensus from all 59 analysts went up from 22.3% to 26.0% CAGR. The growth outlook has improved.Yet BABA is ","content":"<p>Summary</p>\n<ul>\n <li>Rising interest rates have caused a modest dip in stocks, and a pullback in tech stocks. Some individual companies have fallen into bear markets.</li>\n <li>Alibaba represents one of the highest quality (though speculative) hyper-growth blue-chips you can buy today. It began the tech pullback highly undervalued and is now 42% undervalued.</li>\n <li>Post earnings, when management updated analysts on regulatory risks, the LT growth consensus from all 59 analysts went up from 22.3% to 26.0% CAGR. The growth outlook has improved.</li>\n <li>Yet BABA is now trading at some of the lowest valuations in its history, resulting in 27% CAGR consensus return potential through 2027, and 6X the risk-adjusted expected returns of the S&amp;P 500 for the next five years.</li>\n <li>Thanks to the potential to become one of the best dividend growth blue-chips of tomorrow, I've invested almost $50,000 into BABA, and am willing to invest up to $100K if it keeps falling in the short term. For those comfortable with the complex risk profile of this company, and who use proper diversification and prudent risk management, BABA represents a potentially life-changing and rich retirement dream-making long-term investment opportunity.</li>\n <li>This idea was discussed in more depth with members of my private investing community, The Dividend Kings.Get started today »</li>\n</ul>\n<p>It's been a volatile few weeks for stocks, but tech stocks in particular.</p>\n<p><img src=\"https://static.tigerbbs.com/54960030434467240b8c2876e6eaab19\" tg-width=\"640\" tg-height=\"389\" referrerpolicy=\"no-referrer\">While the S&amp;P 500 is just barely off its recent all-time highs, the Nasdaq has fallen 6%. And of course, it's a market of stocks, not a stock market. Individual tech stocks are in corrections or even bear markets.</p>\n<ul>\n <li>tech stocks in general, are now in a pullback</li>\n <li>induced by rising rate concerns</li>\n</ul>\n<p>Why Rising Rates Are NOT A Concern For Prudent Long-Term Investors</p>\n<p>In the modern era, primarily the last 25 years, all stocks have done well in rising long-term rate environments.</p>\n<p><img src=\"https://static.tigerbbs.com/790f8160df564e9692be64a3eb0e396f\" tg-width=\"640\" tg-height=\"484\" referrerpolicy=\"no-referrer\"><i>(Source: Ben Carlson)</i></p>\n<ul>\n <li>growth, value, small, large, didn't matter, stocks went up as rates rose</li>\n</ul>\n<ul>\n <li>A study from JPMorgan(NYSE:JPM)found that from 1963 through 2019 stocks generally went up as long as 10-year yields were under 5%.</li>\n <li>Goldman Sachs'(NYSE:GS)head of quantitative research finds that the rate of interest rate is more important than the actual rate itself</li>\n <li>37+ basis points per month is the tipping point strongly correlated with short-term corrections</li>\n <li><b>in the last month, 10-year yields are up 39 basis points</b></li>\n <li>a level that is historically correlated with mild and short market declines</li>\n <li>in other words, this stock market dip is 100% normal and expected by prudent investors who understand market history</li>\n</ul>\n<p>Even so-called \"bond alternatives,\" such as REITs, are not hurt by rising long-term rates.</p>\n<ul>\n <li>From 1972 to 2018 the % of REIT total returns explained by 10-year yields was just 2%</li>\n <li>had you been able to predict interest rates with perfect precision, you couldn't have predicted actual REIT returns</li>\n</ul>\n<p>Prudent long-term investors know that you don't actually have to predict interest rates to be successful.</p>\n<ul>\n <li>long-term interest rates are just one of many factors that determine company success over time</li>\n <li>and have a relatively small impact on fundamental growth rates</li>\n <li>bond prices are 100% a function of credit quality and LT interest rates</li>\n <li>stock prices are 91% a function (over the long-term) of fundamentals and valuations</li>\n <li>other than generating income, stocks and bonds are different asset classes that are nothing alike</li>\n <li><b>no stock is EVER a true \"Bond alternative\" because of this fundamental fact</b></li>\n</ul>\n<p><img src=\"https://static.tigerbbs.com/6deb7a5ba69273298a5256674c2dd2e8\" tg-width=\"640\" tg-height=\"526\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/74ba0ed8c210f5a079516c7da4f40e80\" tg-width=\"716\" tg-height=\"738\" referrerpolicy=\"no-referrer\"></p>\n<p>If you focus on the trinity of yield + growth + valuation you are optimizing the fundamentals that drive 91% of long-term stock returns.</p>\n<ul>\n <li>combining the 3 core fundamentals of long-term total returns with prudent risk management = practicing disciplined financial science</li>\n</ul>\n<p><b>My Personal Phoenix Retirement Portfolio Fundamentals (75% Dividend Stocks/25% Growth Stocks)</b></p>\n<ul>\n <li>average quality: 10.7/12 SWAN vs. 10.9 average aristocrat</li>\n <li>average safety score: 4.8/5 very safe vs. 4.7 average aristocrat</li>\n <li>average credit rating: A- stable vs. A- stable average aristocrat (2.5% 30-year bankruptcy risk)</li>\n <li><b>the yield on cost: 3.8%</b></li>\n <li><b>current yield: 3.3% vs. 1.6% S&amp;P, 2.1%</b>dividend aristocrats (our equity benchmark) and<b>1.8% a 60/40 stock/bond portfolio</b></li>\n <li><b>Morningstar long-term growth forecast: 16.2% CAGR</b>vs. 6.4% S&amp;P 500 &amp; 7.0% dividend aristocrats</li>\n <li><b>Dividend growth forecast: 7.0% CAGR</b>= almost 4X the rate of inflation, double every decade (every 15-years in inflation-adjusted dollars)</li>\n <li>weighted average forward PE: 16.6 vs. 18.9 historical norm vs. 21.9 S&amp;P 500</li>\n <li><b>average discount to fair value (Morningstar estimate): 12%</b>vs. -32% S&amp;P 500 and -13% aristocrats</li>\n <li><b>5-year analyst consensus total return potential</b>: 3.3% yield + 16.2% CAGR long-term growth +2.6% CAGR valuation boost =<b>22.1%CAGR</b>vs. 6.5% S&amp;P 500</li>\n <li><b>Risk-Adjusted Expected Return: 16.2% CAGR</b>vs. 4.0% CAGR S&amp;P 500 (<b>4.0X market's expected return</b>)</li>\n <li><i><b>LT Consensus Total Return Potential:</b></i><i>3.3% yield on cost + 16.2% growth =</i><i><b>19.5% CAGR</b></i><i>vs. 8.0% S&amp;P 500 and 9.1% dividend aristocrats</i></li>\n</ul>\n<p>How does a double the market's yield and LT growth consensus sound?</p>\n<p>How about the potential to quadruple the S&amp;P 500's returns over the next five years and more than double the market's long-term consensus return potential?</p>\n<p>You can't find that in any index fund, you have to build yourself. That's what DK Phoenix has been doing for almost a year, via a combination of opportunistic limit buying and dollar-cost averaging.</p>\n<ul>\n <li>I've invested about $500,000 of my life savings into the DK Phoenix strategy</li>\n <li>I'm definitely eating my own cooking</li>\n</ul>\n<p>The results so far have been spectacular. 40% gains from a portfolio that started out 100% bonds and has been buying every single day, including during record highs and overvalued markets.</p>\n<p>More importantly, this portfolio is generating an ocean of very safe, and steadily growing dividends.</p>\n<ul>\n <li>during the Great Recession S&amp;P 500 dividends down 25%</li>\n <li>this portfolio's dividends were flat</li>\n</ul>\n<p>However, I want to point out how the potential combination of strong yield + fantastic growth potential and attractive valuations means this portfolio is potentially set up for returns on par with the greatest investors in history.</p>\n<p><img src=\"https://static.tigerbbs.com/d1567a4569f51c6d5f83e6dd572db55c\" tg-width=\"640\" tg-height=\"412\" referrerpolicy=\"no-referrer\"></p>\n<p>But not from some complex or risky asset you have to manage and tie up your money in for seven to 15 years (as with hedge funds), but a 100% liquid world-class blue-chip investment.</p>\n<ul>\n <li>blue-chip dividend investing at its finest</li>\n <li>high-probability/low risk buys that are 91% likely to meet our goals over the long-term</li>\n</ul>\n<p>Note that this portfolio is 25% growth stocks, though every growth company is one I expect to eventually pay a dividend.</p>\n<p>Whether it takes 5 or 50 years doesn't matter to me, because I have 75% of my portfolio generating over $20,000 per year in very safe income that rises in any economic or market condition.</p>\n<p>Why I'm Backing Up The Truck On Alibaba In This Tech Pullback</p>\n<p>My personal Phoenix retirement portfolio is what tracks every Dividend Kings Daily Blue-Chip Deal Video Recommendation.</p>\n<p><img src=\"https://static.tigerbbs.com/ccec58a2a2e51918ad4619f5b10ae7b9\" tg-width=\"640\" tg-height=\"140\" referrerpolicy=\"no-referrer\"></p>\n<ul>\n <li>I've bought Alibaba (BABA) 87 times since April 2020</li>\n <li>investing a total of about $47,000</li>\n <li>about 6.9% of my personal Phoenix portfolio (100 companies)</li>\n <li>my personal risk cap on BABA is $100,000 for the next 20 years, 10X less than what I plan to invest in Amazon(NASDAQ:AMZN)</li>\n <li>my goal is to invest $1 million into Amazon in my lifetime, as fast as I can</li>\n <li>but still a potentially life-changing and rich retirement making investment (see reason five)</li>\n</ul>\n<p>Why am I willing to put up to $100,000 of my hard-earned savings to work in this speculative hyper-growth blue-chip?</p>\n<p>For the same 6 reasons that BABA at today's outrageously attractive valuation might be just what your diversified and prudently risk-managed portfolio needs.</p>\n<p>Reason 1: An Extremely High-Quality Company</p>\n<p>The Dividend Kings motto is \"Quality first and prudent valuation and sound risk management always.\"</p>\n<p>Alibaba Overall Quality: 80% = 10/12 Speculative SWAN</p>\n<table>\n <tbody>\n  <tr>\n   <td><b>BABA</b></td>\n   <td><b>Final Score</b></td>\n   <td><b>Rating</b></td>\n  </tr>\n  <tr>\n   <td>Balance Sheet Safety</td>\n   <td>88%</td>\n   <td>5/5 Very Safe</td>\n  </tr>\n  <tr>\n   <td>Business Model</td>\n   <td>90%</td>\n   <td>3/3 Wide and Stable Moat</td>\n  </tr>\n  <tr>\n   <td>Dependability</td>\n   <td>68%</td>\n   <td>2/4 Above-Average Dependability</td>\n  </tr>\n  <tr>\n   <td><b>Total</b></td>\n   <td><b>80%</b></td>\n   <td><b>10 (SWAN) - Speculative</b></td>\n  </tr>\n </tbody>\n</table>\n<p><i>(Source:Dividend Kings Safety &amp; Quality Tool) updated at the start and end of each day</i></p>\n<ul>\n <li>unchanged from last quarter</li>\n</ul>\n<p>DK overall quality scores factor in about 100 fundamental metrics covering</p>\n<ul>\n <li>dividend safety</li>\n <li>balance sheet strength</li>\n <li>short and long-term bankruptcy risk</li>\n <li>accounting and corporate fraud</li>\n <li>profitability and business model</li>\n <li>long-term sustainability</li>\n <li>management quality</li>\n <li>dividend friendly corporate culture/income dependability</li>\n</ul>\n<p><b>Alibaba Is the 136th Highest Quality Master List Company (Out of 490)</b></p>\n<p><img src=\"https://static.tigerbbs.com/c259ff2db589224b1c883dfd27a06abd\" tg-width=\"640\" tg-height=\"220\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: DK Safety &amp; Quality Tool) updated at the end of each day, sorted by overall quality score</i></p>\n<p>The DK Master List includes every dividend aristocrat, king, champion, and 12/12 Ultra SWAN quality company. Among the highest quality companies on earth, BABA ranks 136th.</p>\n<p>Alibaba's 80% quality score means its similar in quality to such 10/12 SWANs, 11/12 Super SWANs, and 12/12 Ultra SWANs as</p>\n<ul>\n <li>General Dynamics (GD): non-speculative dividend aristocrat</li>\n <li>salesforce.com (CRM): non - speculative hyper-growth</li>\n <li>Royal Bank of Canada (RY): non - speculative</li>\n <li>UnitedHealth Group (UNH): non - speculative</li>\n <li>Facebook (FB): non - speculative hyper-growth</li>\n <li>Cisco (CSCO): non - speculative</li>\n <li>Magellan Midstream Partners (MMP) - non-speculative</li>\n <li>Lockheed Martin (LMT) - non -speculative</li>\n <li>Texas Instruments (TXN) - non-speculative</li>\n <li>British American Tobacco (BTI) - non-speculative</li>\n</ul>\n<p>All told, our quality score includes 137 fundamental metrics pertaining to dividend safety, long-term dependability, and total returns. Every metric was selected based on</p>\n<ul>\n <li>decades of empirical data</li>\n <li>the experience of the greatest investors in history</li>\n <li>eight rating agencies</li>\n <li>and what blue-chip economists and analyst firms consider most closely correlated to a company's long-term success.</li>\n</ul>\n<p>Our goal is to ensure we see fundamental deterioration coming before dividends get cut and a company, in a worst-case scenario, goes bankrupt.</p>\n<ul>\n <li>even dividend aristocrats can fail (just ask GE or CTL investors)</li>\n <li>even dividend aristocrats can go bankrupt (just ask Kmart or Winn-Dixie investors)</li>\n</ul>\n<p>There are no sacred cows in the Dividend Kings universe. Where the fundamentals lead we always follow.</p>\n<ul>\n <li>the essence of financial science</li>\n</ul>\n<p>Reason 2: Remarkable Long-Term Growth Potential</p>\n<p><img src=\"https://static.tigerbbs.com/7c6b6a726a78d0e0d012df46602fd475\" tg-width=\"640\" tg-height=\"132\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: FactSet Research Terminal)</i></p>\n<ul>\n <li>according to FactSet the median LT growth consensus from all 59 analysts that cover BABA is 26.0% CAGR</li>\n <li>collectively these 59 experts know BABA better than anyone other than management</li>\n <li>pre-earnings growth consensus was 22.3%</li>\n</ul>\n<p><img src=\"https://static.tigerbbs.com/b39eecccd04752aa11a27f8f8c8d6587\" tg-width=\"640\" tg-height=\"390\" referrerpolicy=\"no-referrer\"></p>\n<ul>\n <li>YCharts LT growth consensus is less bullish but still showing 20% hyper-growth</li>\n</ul>\n<p><img src=\"https://static.tigerbbs.com/9090a70c545a4c112f90b02d4de12131\" tg-width=\"640\" tg-height=\"395\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: FAST Graphs, FactSet Research)</i></p>\n<ul>\n <li>5 analyst median FAST Graphs consensus is 25.3% CAGR LT growth</li>\n</ul>\n<p>Alibaba Medium-Term Growth Consensus</p>\n<table>\n <tbody>\n  <tr>\n   <td><b>Metric</b></td>\n   <td><b>Fiscal 2021 Consensus</b></td>\n   <td><b>2022 consensus growth</b></td>\n   <td><b>2023 consensus growth</b></td>\n   <td><b>2024 consensus growth</b></td>\n   <td><b>2025 consensus growth</b></td>\n   <td><p><b>2026 consensus growth</b></p></td>\n  </tr>\n  <tr>\n   <td>EPS</td>\n   <td>39%</td>\n   <td>15%</td>\n   <td>24%</td>\n   <td>23%</td>\n   <td>20%</td>\n   <td>16%</td>\n  </tr>\n  <tr>\n   <td>Owner Earnings (Buffett smoothed out FCF)</td>\n   <td>-3%</td>\n   <td>162%</td>\n   <td>NA</td>\n   <td>NA</td>\n   <td>NA</td>\n   <td>NA</td>\n  </tr>\n  <tr>\n   <td>Operating Cash Flow</td>\n   <td>45%</td>\n   <td>11%</td>\n   <td>18%</td>\n   <td>29%</td>\n   <td>NA</td>\n   <td>NA</td>\n  </tr>\n  <tr>\n   <td>Free cash flow</td>\n   <td>52%</td>\n   <td>-1%</td>\n   <td>25%</td>\n   <td>24%</td>\n   <td>NA</td>\n   <td>NA</td>\n  </tr>\n  <tr>\n   <td>EBITDA</td>\n   <td>58%</td>\n   <td>24%</td>\n   <td>23%</td>\n   <td>NA</td>\n   <td>NA</td>\n   <td>NA</td>\n  </tr>\n  <tr>\n   <td>EBIT (operating profit)</td>\n   <td>29%</td>\n   <td>40%</td>\n   <td>30%</td>\n   <td>NA</td>\n   <td>NA</td>\n   <td>NA</td>\n  </tr>\n </tbody>\n</table>\n<p><i>(Source: FAST Graphs, FactSet Research Terminal)</i></p>\n<p>20% to 26% CAGR LT growth consensus is one of the fastest of any company on earth, much less a $650 billion behemoth like BABA.</p>\n<p>Where is BABA's remarkable growth expected to come from?</p>\n<p><img src=\"https://static.tigerbbs.com/7b04a7c47511897fa2d2e3170feaf91b\" tg-width=\"640\" tg-height=\"413\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: earnings presentation)</i></p>\n<ul>\n <li>Alibaba has almost 1 billion users</li>\n <li>and is one of the fastest-growing cloud computing companies on earth</li>\n <li>#1 in cloud computing in China</li>\n</ul>\n<p><img src=\"https://static.tigerbbs.com/d8d32d464a818f669520b792adf9971a\" tg-width=\"640\" tg-height=\"484\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: earnings presentation)</i></p>\n<ul>\n <li><b>Alibaba is the Amazon/Alphabet/Facebook/PayPal/Microsoft of China</b></li>\n <li>it's basically a superior quality Chinese Nasdaq index</li>\n <li>just as Amazon is a superior quality alternative to the US Nasdaq</li>\n <li>except that BABA has even more optionality than Amazon courtesy of several<b>\"Super Apps\"</b>of which the US has no equivalent</li>\n <li>Super Apps are basically all the apps you use on a daily basis in one, and in China, they dominate the lives of almost 1.5 billion people</li>\n <li>ecosystems of steroids, and the ultimate wide-moat businesses</li>\n <li>the only effective limitation is government regulations (more on this in the risk profile)</li>\n</ul>\n<p><img src=\"https://static.tigerbbs.com/9f0062920c271ce804438eca217557aa\" tg-width=\"640\" tg-height=\"338\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: FactSet Research Terminal)</i></p>\n<ul>\n <li>27% annualized revenue growth through 2026</li>\n <li>vs. 19% for Amazon</li>\n <li>34% CAGR cloud computing revenue growth</li>\n <li>core Chinese commerce sales growth 28% CAGR</li>\n</ul>\n<p>With almost 1.5 billion Chinese consumers to tap into, Alibaba's growth runway is very long.</p>\n<ul>\n <li>its optionality is among the best of any company on earth</li>\n <li>potentially superior to even Amazon's</li>\n</ul>\n<p>Alibaba Consensus Profitability Forecast</p>\n<table>\n <tbody>\n  <tr>\n   <td><b>Year</b></td>\n   <td><b>Sales</b></td>\n   <td><b>FCF</b></td>\n   <td><b>EBITDA</b></td>\n   <td><b>EBIT</b></td>\n   <td><b>Net Income</b></td>\n  </tr>\n  <tr>\n   <td>2020</td>\n   <td>$71,376</td>\n   <td>$18,634.0</td>\n   <td>$22,077.0</td>\n   <td>$12,803.0</td>\n   <td>$20,902.0</td>\n  </tr>\n  <tr>\n   <td>2021</td>\n   <td>$109,049.0</td>\n   <td>$30,666.0</td>\n   <td>$32,294.0</td>\n   <td>$18,332.0</td>\n   <td>$26,210.0</td>\n  </tr>\n  <tr>\n   <td>2022</td>\n   <td>$142,453.0</td>\n   <td>$33,923.0</td>\n   <td>$40,043.0</td>\n   <td>$24,985.0</td>\n   <td>$27,169.0</td>\n  </tr>\n  <tr>\n   <td>2023</td>\n   <td>$172,942.0</td>\n   <td>$39,671.0</td>\n   <td>$49,694.0</td>\n   <td>$33,156.0</td>\n   <td>$34,068.0</td>\n  </tr>\n  <tr>\n   <td>2024</td>\n   <td>$215,267.0</td>\n   <td>$45,789.0</td>\n   <td>$59,475.0</td>\n   <td>$43,961.0</td>\n   <td>$43,031.0</td>\n  </tr>\n  <tr>\n   <td>2025</td>\n   <td>$264,808.0</td>\n   <td>NA</td>\n   <td>$72,896.0</td>\n   <td>$57,133.0</td>\n   <td>$54,736.0</td>\n  </tr>\n  <tr>\n   <td>2026</td>\n   <td>$296,476.0</td>\n   <td>NA</td>\n   <td>$95,192.0</td>\n   <td>$70,453.0</td>\n   <td>$63,654.0</td>\n  </tr>\n </tbody>\n</table>\n<table>\n <tbody>\n  <tr>\n   <td><b>Year</b></td>\n   <td><b>FCF Margin</b></td>\n   <td><b>EBITDA Margin</b></td>\n   <td><b>EBIT Margin</b></td>\n   <td><b>Net Margin</b></td>\n  </tr>\n  <tr>\n   <td>2020</td>\n   <td>26.1%</td>\n   <td>30.9%</td>\n   <td>17.9%</td>\n   <td>29.3%</td>\n  </tr>\n  <tr>\n   <td>2021</td>\n   <td>28.1%</td>\n   <td>29.6%</td>\n   <td>16.8%</td>\n   <td>24.0%</td>\n  </tr>\n  <tr>\n   <td>2022</td>\n   <td>23.8%</td>\n   <td>28.1%</td>\n   <td>17.5%</td>\n   <td>19.1%</td>\n  </tr>\n  <tr>\n   <td>2023</td>\n   <td>22.9%</td>\n   <td>28.7%</td>\n   <td>19.2%</td>\n   <td>19.7%</td>\n  </tr>\n  <tr>\n   <td>2024</td>\n   <td>21.3%</td>\n   <td>27.6%</td>\n   <td>20.4%</td>\n   <td>20.0%</td>\n  </tr>\n  <tr>\n   <td>2025</td>\n   <td>NA</td>\n   <td>27.5%</td>\n   <td>21.6%</td>\n   <td>20.7%</td>\n  </tr>\n  <tr>\n   <td>2026</td>\n   <td>NA</td>\n   <td>32.1%</td>\n   <td>23.8%</td>\n   <td>21.5%</td>\n  </tr>\n </tbody>\n</table>\n<p><i>(Source: FactSet Research Terminal)</i></p>\n<ul>\n <li>Alibaba is still relatively early in its growth cycle</li>\n <li>investing very heavily into R&amp;D and growth capex: $12.6 billion in 2020</li>\n <li>$37.2 billion growth spending consensus in 2026</li>\n <li>yet analysts expect already impressive profitability to remain relatively stable during the next five years</li>\n</ul>\n<p><b>Alibaba Consensus Potential Future Dividend Forecast</b></p>\n<table>\n <tbody>\n  <tr>\n   <td><b>Year</b></td>\n   <td><b>FCF/Share Consensus</b></td>\n   <td><b>Dividend Per Share (50% Payout Ratio)</b></td>\n   <td><b>Yield On Today's Cost</b></td>\n   <td><b>Consensus Yield Potential</b></td>\n   <td><b>2026 Consensus Price</b></td>\n  </tr>\n  <tr>\n   <td>2020</td>\n   <td>$6.98</td>\n   <td>$3.49</td>\n   <td>1.47%</td>\n   <td>NA</td>\n   <td>NA</td>\n  </tr>\n  <tr>\n   <td>2021</td>\n   <td>$8.95</td>\n   <td>$4.48</td>\n   <td>1.88%</td>\n   <td>1.39%</td>\n   <td>$323.00</td>\n  </tr>\n  <tr>\n   <td>2022</td>\n   <td>$10.70</td>\n   <td>$5.35</td>\n   <td>2.25%</td>\n   <td>1.41%</td>\n   <td>$379.00</td>\n  </tr>\n  <tr>\n   <td><i><b>2023</b></i></td>\n   <td><i><b>$13.84</b></i></td>\n   <td><i><b>$6.92</b></i></td>\n   <td><i><b>2.91%</b></i></td>\n   <td><i><b>1.48%</b></i></td>\n   <td><i><b>$466.00</b></i></td>\n  </tr>\n </tbody>\n</table>\n<p><i>(Source: FactSet Research Terminal)</i></p>\n<ul>\n <li>if Alibaba were to start paying 50% of its FCF as dividends then by 2023 that would equal a yield on cost of almost 3% and 1.5% consensus yield</li>\n</ul>\n<p>Why do I expect BABA to eventually start paying dividends?</p>\n<p><b>Alibaba Consensus Balance Sheet Forecast</b></p>\n<p><img src=\"https://static.tigerbbs.com/61c78f5b92f0f7db55569cdd0cd8cd2f\" tg-width=\"640\" tg-height=\"258\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: FactSet Research Terminal)</i></p>\n<ul>\n <li>despite spending $37 billion to fund growth in 2026, analysts expect BABA to end fiscal 2026 with $275 billion in cash and $260 billion in net cash</li>\n <li>more than Apple(NASDAQ:AAPL)had when it started buying back stock and paying dividends</li>\n</ul>\n<p>What's more, by 2024 alone analysts expect BABA's annual free cash flow to reach $46 billion.</p>\n<p><img src=\"https://static.tigerbbs.com/a072c7a0e2793b347b635e08315d24bc\" tg-width=\"640\" tg-height=\"148\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: FactSet Research Terminal)</i></p>\n<ul>\n <li>if FCF grows at the 26% LT EPS growth consensus rate then by 2026 $73 billion in annual free cash flow</li>\n</ul>\n<p>The bottom line on BABA is that it's the #1 global digital retailer but so much more. And it has the potential to make patient long-term investors extremely wealthy and eventually fund comfortable retirements from future dividends alone.</p>\n<ul>\n <li>what I call my \"Jack Ma retirement plan\"</li>\n</ul>\n<p>Yet despite this incredible quality and growth potential, the market is mispricing BABA to a remarkable degree right now.</p>\n<p>Reason 3: One Of Most Undervalued Tech Stocks In The World</p>\n<table>\n <tbody>\n  <tr>\n   <td><b>Metric</b></td>\n   <td><b>Historical Fair Value Multiples (all-years)</b></td>\n   <td><b>Fiscal 2021</b></td>\n   <td><b>Fiscal 2022</b></td>\n   <td><b>Fiscal 2023</b></td>\n  </tr>\n  <tr>\n   <td>Earnings</td>\n   <td>32.2</td>\n   <td>$334</td>\n   <td>$386</td>\n   <td>$480</td>\n  </tr>\n  <tr>\n   <td>Owner Earnings (Buffett smoothed out FCF)</td>\n   <td>24.6</td>\n   <td>$218</td>\n   <td>$572</td>\n   <td>NA</td>\n  </tr>\n  <tr>\n   <td>Operating Cash Flow</td>\n   <td>23.1</td>\n   <td>$325</td>\n   <td>$362</td>\n   <td>$428</td>\n  </tr>\n  <tr>\n   <td>Free Cash Flow</td>\n   <td>30.7</td>\n   <td>$338</td>\n   <td>$336</td>\n   <td>$421</td>\n  </tr>\n  <tr>\n   <td>EBITDA</td>\n   <td>33.2</td>\n   <td>$389</td>\n   <td>$485</td>\n   <td>$597</td>\n  </tr>\n  <tr>\n   <td>EBIT (operating income)</td>\n   <td>45.1</td>\n   <td>$298</td>\n   <td>$416</td>\n   <td>$541</td>\n  </tr>\n  <tr>\n   <td><b>Average</b></td>\n   <td><b>$307</b></td>\n   <td><b>$413</b></td>\n   <td><b>$485</b></td>\n  </tr>\n  <tr>\n   <td>Current Price</td>\n   <td>$237.76</td>\n  </tr>\n  <tr>\n   <td><p><i><b>Discount To Fair Value</b></i></p></td>\n   <td><i><b>23%</b></i></td>\n   <td><i><b>42%</b></i></td>\n   <td><i><b>51%</b></i></td>\n  </tr>\n  <tr>\n   <td><i>Upside To Fair Value</i></td>\n   <td><i>29%</i></td>\n   <td><i>74%</i></td>\n   <td><i>104%</i></td>\n  </tr>\n  <tr>\n   <td><p><i><b>Annualized Total Return Potential</b></i></p></td>\n   <td><i><b>NA</b></i></td>\n   <td><i><b>74%</b></i></td>\n   <td><i><b>46%</b></i></td>\n  </tr>\n </tbody>\n</table>\n<p><i>(Source: F.A.S.T. Graphs, FactSet Research)</i></p>\n<p>BABA is trading at a 42% discount to fiscal 2022 consensus fundamentals (which ends March 2022)</p>\n<ul>\n <li>A return to average historical fair value by the end of March 2023 would result in a 46% CAGR total return</li>\n <li>2021 fair value range: $336 to $572</li>\n <li>2021 Harmonic Average Fair Value (smooths out outliers): $413</li>\n</ul>\n<p>Even using the most conservative fair value of $336, BABA is still 29% undervalued and a potentially good speculative buy.</p>\n<p><img src=\"https://static.tigerbbs.com/6c6cd6870a518767764bd87d37ec06d4\" tg-width=\"640\" tg-height=\"376\" referrerpolicy=\"no-referrer\"><i>(Source: FAST Graphs, FactSet Research)</i></p>\n<ul>\n <li>on a blended PE basis, BABA is now tied for the lowest valuation in its history on the NYSE</li>\n <li>in other words, if you've ever wanted to buy BABA, now is the time</li>\n <li>very likely to be near its eventual bottom</li>\n</ul>\n<p>I know that a lot of readers are now thinking \"sure, consensus estimates say BABA is a growth powerhouse, BUT what if analysts are wrong.\"</p>\n<p>There is one thing we know for certain about all growth consensus estimates.</p>\n<ul>\n <li>they are wrong</li>\n <li>the question is how much</li>\n</ul>\n<p><b>Alibaba Analyst Scorecard</b></p>\n<p><img src=\"https://static.tigerbbs.com/bd5201fe390f06c8cd94462a06114fdd\" tg-width=\"640\" tg-height=\"376\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/6b1da8d579e9049d31188aafb07d3c47\" tg-width=\"640\" tg-height=\"346\" referrerpolicy=\"no-referrer\"></p>\n<p>Despite a highly complex business model analysts are relatively good at forecasting BABA's growth. Specifically, the company has only missed two-year earnings growth forecasts twice out of the six years that analysts have offered them.</p>\n<ul>\n <li>the margin of error 20% to the upside and downside (modern era with lots of analyst coverage)</li>\n <li>long-term growth consensus range: 20.0% to 26% CAGR</li>\n <li>long-term growth consensus (from all 60 analysts ): 25.3% CAGR</li>\n <li>the margin of error adjusted long-term growth consensus range: 16% to 32% CAGR</li>\n</ul>\n<p><img src=\"https://static.tigerbbs.com/10e55ff4c0570b0156c5fc04134c6c90\" tg-width=\"640\" tg-height=\"456\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: F.A.S.T. Graphs, FactSet Research)</i></p>\n<p>The current analyst consensus of 26.0% CAGR is similar to the growth rate of the last five years. The historical growth range since BABA came to the NYSE is 20% to 44% CAGR.</p>\n<p>The secular growth catalysts represented by BABA's dominance in Chinese digital payments, banking, cloud computing, online retail, digital marketing, etc., means that I consider the analyst growth consensus range reasonable and achievable.</p>\n<p>Stricter regulations are not expected to hamper BABA's growth significantly, according to the 60 analyst median consensus.</p>\n<p>Reason 4: Total Return Potential That Could Make You Rich</p>\n<ul>\n <li>for non-dividend stocks, total returns generated from growth and valuation mean reversion is the entire point for most investors</li>\n <li>BABA's consensus return potential is outstanding</li>\n</ul>\n<p><b>BABA 2023 Consensus Return Potential</b></p>\n<p><img src=\"https://static.tigerbbs.com/ba5fce782ee2484df31380823cbd08d1\" tg-width=\"640\" tg-height=\"383\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: F.A.S.T. Graphs, FactSet Research)</i></p>\n<p>If BABA grows as analysts expect through March 2023, and returns to historical fair value, then investors could expect</p>\n<ul>\n <li>102% total returns</li>\n <li>39.9% CAGR returns</li>\n <li>vs. 2.9% CAGR S&amp;P 500</li>\n <li><i><b>14X better than the S&amp;P 500</b></i></li>\n</ul>\n<p>Alibaba March 2027 Consensus Return Potential</p>\n<p><img src=\"https://static.tigerbbs.com/ad665b05d566bc36268bf51f43f642a8\" tg-width=\"640\" tg-height=\"395\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: F.A.S.T. Graphs, FactSet Research) - actual consensus EPS estimates through 2026</i></p>\n<p>If BABA grows as analysts expect through March 2027, and returns to historical fair value, then you could expect</p>\n<ul>\n <li>324% total returns, more than quadrupling your investment</li>\n <li>26.8% CAGR returns</li>\n <li>vs. 6.5% CAGR S&amp;P 500</li>\n</ul>\n<p>Over the very long term, here's what analysts expect.</p>\n<ul>\n <li>0% yield + 26.0% CAGR growth = 26.0% CAGR total returns (16% to 32% CAGR range)</li>\n <li>vs. 8.0% CAGR S&amp;P 500 and 9.1% CAGR dividend aristocrats</li>\n</ul>\n<p>Reason 5: Total Return Potential That Could Turn Thousands Into Tens Of Millions Over Decades</p>\n<p>What does potential hyper-growth sustained over many years and decades look like? Generation wealth, that can not just fund your rich retirement, but that of your children and grandchildren as well.</p>\n<p>Alibaba 30-Year Monte Carlo Simulation, Statistical Inflation+ Tax Adjusted Total Return Forecast</p>\n<p><img src=\"https://static.tigerbbs.com/fdf77d6747dcbef9c96c2442919fb370\" tg-width=\"640\" tg-height=\"201\" referrerpolicy=\"no-referrer\"><img src=\"https://static.tigerbbs.com/4e592eb0d96f33779a576b8fee99193a\" tg-width=\"640\" tg-height=\"294\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/d7a3bf90aac22084eea55216a46577c1\" tg-width=\"640\" tg-height=\"282\" referrerpolicy=\"no-referrer\"></p>\n<blockquote>\n <i>Monte Carlo simulation results for 5000 portfolios with $1,000 initial portfolio balance using available statistical model data from Jan 2015 to Dec 2020.Returns were modeled as correlated random samples from a multivariate normal distribution.The historical pre-tax return for the selected portfolio for this period was 21.09% mean return (14.38% CAGR) with a 36.62% standard deviation of annual returns.The simulated asset returns were adjusted based on provided tax assumptions.The simulated inflation model used historical inflation with a 1.75% mean and 0.94% standard deviation based on the Consumer Price Index (CPI-U) data from Jan 2015 to Dec 2020.The generated inflation samples were correlated with simulated asset returns based on historical correlations.The available historical data for the simulation inputs was constrained by Alibaba Group Holding Limited (BABA) [Oct 2014 - Feb 2021]. (Source: Portfolio Visualizer)</i>\n</blockquote>\n<p>BABA's historical returns are depressed because it's currently in a bear market. Yet even if it delivers historical returns over the next 30 years, the standard retirement time frame there is an 80% statistical probability that</p>\n<ul>\n <li>$1,000 invested today becomes $6,500 to $324,000</li>\n <li>adjusted-for inflation and taxes</li>\n <li>assuming top tax bracket, including for my home state of MN</li>\n</ul>\n<p>What if BABA is able to sustain approximately 15% CAGR growth for longer than 30 years? Then a modest investment today could transform into generation wealth.</p>\n<p>Alibaba 75-Year Monte Carlo Simulation, Statistical Inflation+ Tax Adjusted Total Return Forecast</p>\n<p><img src=\"https://static.tigerbbs.com/130bb2a9ff8bb6a1de235ce4fda182f6\" tg-width=\"640\" tg-height=\"203\" referrerpolicy=\"no-referrer\"><img src=\"https://static.tigerbbs.com/7a1be76959eaedd5e25ed17b15702546\" tg-width=\"640\" tg-height=\"291\" referrerpolicy=\"no-referrer\"><i>(Source: Portfolio Visualizer)</i></p>\n<ul>\n <li>with a $75,000 total investment, made at the best valuations in five years, there is a very good statistical chance that I will eventually become an Alibaba millionaire</li>\n <li>there is a decent chance that my children and grandchildren will be Alibaba billionaires</li>\n</ul>\n<p>Reason 6: One Of The Most Reasonable And Prudent Growth Stocks You Can Buy Today</p>\n<p>I never recommend a company, much less put my own money at risk, without first knowing exactly how prudent a potential investment it is relative to the S&amp;P 500, most people's default alternative.</p>\n<p><img src=\"https://static.tigerbbs.com/28d872260c41f72ddc16460a3024e8bf\" tg-width=\"640\" tg-height=\"197\" referrerpolicy=\"no-referrer\"></p>\n<p>The investment decision score is based on valuation and the three core principles of all successful long-term investors.</p>\n<img src=\"https://static.tigerbbs.com/25b7070d1af7586faee7c2814d82bb5c\" tg-width=\"552\" tg-height=\"774\">\n<table>\n <tbody>\n  <tr></tr>\n  <tr></tr>\n </tbody>\n</table>\n<p><i>(Source:Dividend Kings Automated Investment Decision Tool)</i></p>\n<p>BABA is one of the most reasonable and prudent hyper-growth stocks you can buy today. It offers</p>\n<ul>\n <li>objectively superior quality to the average S&amp;P 500 company (credit ratings and ROC)</li>\n <li>much faster growth (3 to 4X faster)</li>\n <li>much superior valuation (mirror image of the S&amp;P 500)</li>\n <li><b>6X the 5-year risk-adjusted expected returns</b></li>\n</ul>\n<p>That's assuming you're</p>\n<ul>\n <li>comfortable with the risk profile (see dive section)</li>\n <li>own it within a diversified and prudently risk-managed portfolio</li>\n</ul>\n<p>Alibaba Risk Profile: Why BABA Isn't Right For Everyone<img src=\"https://static.tigerbbs.com/e3b51aa88280a43b2551902a5ae635ef\" tg-width=\"640\" tg-height=\"223\" referrerpolicy=\"no-referrer\">Fundamental Risk Summary</p>\n<blockquote>\n In our view, the most pressing risks to the Alibaba investment thesis are a sustained slowdown in Chinese consumption patterns, e-commerce competition, increased regulatory scrutiny, and the possibility that ancillary businesses divert management's attention and reduce profitability.China's e-commerce landscape has become increasingly competitive, with Pinduoduo registering faster GMV and user growth than Alibaba with the support of Tencent's traffic and its group-buying traffic generation method, and JD.com positioning itself as a credible rival through its fulfillment capability, quality assurance, and its partnerships with Tencent. These platforms do not yet have Alibaba's scale in China, but they specialize in specific products or services, or markets, which might impede Alibaba's growth.Alibaba is also subject to increased online and mobile payment regulation. Financial regulators in China have continuously scrutinized online and mobile payment services. Alibaba has persistently faced the issue of counterfeit and infringing goods on its marketplaces. Hangzhou government's assigning of representatives to work inside Alibaba also raise concerns of some investors, although there is no evidence of consequence of value destruction for Alibaba.Expansion into peripheral businesses might distract management, reduce profitability without materially improve Alibaba's ecosystem. While we're optimistic about Alibaba's ability to become a preferred partner for international retailers and consumer brands looking to sell in China, the firm does not enjoy the same network effect and brand recognition in other countries, and it may face challenges directly expanding in these markets...Like many other Chinese Internet companies listed in overseas markets, Alibaba operates under a\n <b>variable interest entity, or VIE, structure</b>designed to let companies bypass Chinese legal restrictions on foreign ownership in certain sectors.Alibaba's foreign investors will essentially hold shares of Alibaba's VIE domiciled in the Cayman Islands. We don't expect any legal challenges to VIE structures by the Chinese government in the future. However, if the legitimacy of Alibaba's related VIE is found to violate applicable law or regulation, Chinese regulatory authorities might take action against the VIE, including revoking the business and operating licenses of Alibaba's subsidiaries or the VIE, or discontinuing, restricting, or restructuring Alibaba's operations. Since the Chinese Ministry of Commerce has the jurisdiction to regulate VIEs, we believe overseas investors would have limited legal rights...Despite\n <b>management's proven execution capabilities</b>,\n <b>we have concerns regarding Alibaba's corporate governance</b>, which is reflected in our Poor equity stewardship rating.In our view,\n <b>Alibaba is led by a capable and ambitious management team</b>. Founder and former executive chairman Jack Ma has been the keeper of the flame since the company's founding in 1999. Under his leadership, Alibaba has become China's leading e-commerce player, accounting for the majority of transaction volume for China's online shopping industry.Over the past decade, Taobao has transformed the shopping behaviors of millions of Chinese consumers. We believe management has also done a commendable job developing and preserving Alibaba's wide economic moat by building several other leading online marketplaces and platforms such a Tmall, Juhuasuan, Alibaba.com, AliExpress, Alipay, AliCloud, and Ele.me. Although the company faces a potentially uneven long-term economic backdrop and new sources of competition in China,\n <b>we remain confident that Alibaba can sustain its wide economic moat over the long term under its existing leadership.</b>Ma's decision to step away from Alibaba's executive chairman role in 2019 and the company's board of directors will not affect our positive long-term bias for two reasons. First,\n <b>we believe recent results demonstrate that Alibaba has a deep management bench</b>,\n <b>including current CEO Daniel Zhang</b>(who was appointed CEO of Alibaba Group in May 2015, will assume the chairman role in 2019, and played a central role in the development of the Singles Day shopping event, building the Tmall platform from a regional to global business-to-consumer platform, and deploying several of Alibaba's \"New Retail\" strategies) and executive vice chairman Joe Tsai. Second, we believe Ma's involvement with the Alibaba Partnership--a group of core company managers--will allow him to stay involved with key strategic decisions...We harbor concerns about Alibaba's partnership structure, which might jeopardize the board's independence.The partnership is led by a committee of five, including Ma, executive vice chairman Joe Tsai, and CEO Daniel Zhang. The Alibaba Partnership has the exclusive right to nominate or appoint up to a simple majority of the members of its board of directors.Any board candidate it nominates is presented to shareholders for voting. If the candidate is not elected by shareholders, the partnership can appoint another candidate without a vote. That candidate will serve as an interim director until the next annual general meeting, where either the same candidate or yet another nominee proposed by Alibaba partners will stand for election.The current board of directors is composed of 11 directors, five of which are Alibaba Partnership nominees. Alibaba Partnership can also nominate or appoint two additional directors to the board, which would increase the number of directors to 13, and the Partnership will get majority control of the board.\n <b>The Partnership essentially controls the board and limits the influence of outside shareholders</b>.\" - Morningstar (emphasis added)\n</blockquote>\n<p>MSCI, Reuters and Morningstar, as well as S&amp;P, Fitch, and Moody's have concerns about BABA's corporate governance, which is factored into each company's respective rating on BABA's credit and material ESG risk (more on that later).</p>\n<ul>\n <li>all Chinese companies are speculative</li>\n <li>thus requiring a 5% higher margin of safety to be a potentially good buy (20% in the case of BABA)</li>\n <li>investors not comfortable with BABA's complex risk profile should not own it</li>\n <li>no company is right for everyone</li>\n</ul>\n<p>Alibaba ESG Risk Analysis: An Important Component Of A Company's Overall Financial Risk Profile (But Especially For Chinese Tech Companies)</p>\n<ul>\n <li>critically important to anyone concerned about corporate governance and potential accounting fraud</li>\n</ul>\n<p>In today's hyperpolarized political climate, some investors consider ESG to be political/personal ethics/opinion-driven nonsense.</p>\n<p>ESG as measured by institutions is NOT simply the concern of \"woke\" and \"on-trend\" hippy millennials trying to virtue signal to impress Silicon Valley venture capitalists or social media followers.</p>\n<blockquote>\n Companies with strong ESG profiles may be better positioned for future challenges and experience fewer instances of bribery, corruption, and fraud.\" - MSCI\n</blockquote>\n<p>According to the world's best risk-assessors, ESG metrics are a critical component of a company's overall risk profile. Here's who considers ESG important and builds it into their safety models and ratings.</p>\n<ul>\n <li>BlackRock - #1 asset manager in the world</li>\n <li>MSCI - #1 indexing giant</li>\n <li>Morningstar</li>\n <li>Reuters/Refinitiv</li>\n <li>ISS (Institutional Shareholder Services) - #1 corporate proxy firm on earth</li>\n <li>S&amp;P</li>\n <li>Fitch</li>\n <li>Moody's</li>\n <li>DBRS (Canadian credit rating agency)</li>\n <li>AMBest (insurance industry rating agency)</li>\n</ul>\n<p>The reason some investors consider ESG to be political is that some investors consider some industries to be inherently \"evil\" such as tobacco, energy, big tech, pharma, health insurers, fast-food, snack foods, and defense contractors.</p>\n<ul>\n <li>such opinions are personal and based on individual ethics</li>\n <li><b>ESG scores as calculated by institutions are quantitatively based and focused on only fundamental financial risks to the underlying business</b></li>\n <li>they are compared against industry peers and as objective as can be realistically expected</li>\n</ul>\n<p>Personal ethical or political opinions are not what rating agencies or asset managers care about.</p>\n<p>MSCI rates over 2,800 global companies on 37 ESG metrics, using a quantitative and qualitative approach, just as all the rating agencies do, and Ben Graham recommended.</p>\n<blockquote>\n Our global team of 185 experienced research analysts assesses thousands of data points across 37 ESG Key Issues, focusing on the intersection between a company's core business and the industry issues that can create significant risks and opportunities for the company. Companies are rated on an AAA-CCC scale\n <b>relative to the standards and performance of their industry peers</b>...\n</blockquote>\n<p><img src=\"https://static.tigerbbs.com/298cf61010c39363fd5dc1b3438f0774\" tg-width=\"640\" tg-height=\"570\" referrerpolicy=\"no-referrer\"></p>\n<blockquote>\n The MSCI ESG rating model seeks to answer four key questions about companies:• What are the most significant ESG risks and opportunities facing a company and its industry?• How exposed is the company to those key risks and/or opportunities?• How well is the company managing key risks and opportunities?• What is the overall picture for the company and how does it compare to its global industry peers?\" - MSCI\n</blockquote>\n<p><img src=\"https://static.tigerbbs.com/af3bf10cdfd7ab0fe07e7c636b3eded9\" tg-width=\"640\" tg-height=\"551\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: MSCI)</i></p>\n<p><b>The ESG scores you find from the best risk-assessors in the world are not opinions based on political correctness.They use a quantitative approach to fundamental company risk analysis.</b>One based on decades of historical data pertaining to minimizing the risk of fundamental deterioration, bankruptcy, and stock/bond investors getting wiped out.</p>\n<ul>\n <li>ESG risk ratings + trends make up about 20% of the overall DK quality score for most companies that have an ESG rating from MSCI, Morningstar/Sustainalytics, and Reuters/Refinitiv</li>\n</ul>\n<p><img src=\"https://static.tigerbbs.com/918fd6ab7c2e2163bd8d547d050d75d6\" tg-width=\"640\" tg-height=\"512\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/8a8bd15a9cc3aea38257b3c9645d424f\" tg-width=\"640\" tg-height=\"220\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: MSCI)</i></p>\n<ul>\n <li>based on the 12 material sustainability factors MSCI's 185 industry experts believe is important to financial risk for midstream companies, BABA scores are in the bottom 37% of its peers (below average)</li>\n <li>that score is has been improving over the last four years</li>\n <li>though it dipped one level in the 2020 annual update</li>\n</ul>\n<p>How Morningstar/Sustainalytics Assesses Long-Term ESG Financial Risk</p>\n<ul>\n <li>Morningstar/Sustainalytics cares about material ESG variables that are historically correlated to a company's enterprise value (market cap + net debt)</li>\n <li>Financial risk NOT political/personal ethical opinions are what Morningstar assesses</li>\n <li>20 fundamental metrics analyzed, compared to industry peers</li>\n <li>100 point risk scale</li>\n <li>lower is better</li>\n</ul>\n<p><img src=\"https://static.tigerbbs.com/6235ae87804a6aa4155b7553cf0470ef\" tg-width=\"640\" tg-height=\"406\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/22bc0cb2ca3614062e1aaabda81de4f0\" tg-width=\"640\" tg-height=\"370\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/2b225070612fbf42d76647657fd9c799\" tg-width=\"640\" tg-height=\"420\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/a2d7fbe67e46b7732bad777d103ec779\" tg-width=\"640\" tg-height=\"286\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/4e030c1a04fb5a8ba813bcf1831db84b\" tg-width=\"640\" tg-height=\"471\" referrerpolicy=\"no-referrer\"></p>\n<p>Every controversy surrounding BABA is factored into Morningstar ESG risk rating. That includes the controversies around anti-trust practices for which it's now under investigation by Chinese regulators.</p>\n<ul>\n <li>Morningstar considers this to be a medium ESG risk industry</li>\n <li>and management is doing an average job of managing that risk</li>\n <li>Morningstar scores BABA 26.2 \"medium risk\" in the bottom 25% of tech companies and in the top 43% of all 13,645 companies Morningstar rates</li>\n <li>risk rating increased from 24.6 to 26.2 in the past year due to increasing regulatory concerns</li>\n</ul>\n<p>Reuters/Refinitiv also provides ESG financial risk ratings.</p>\n<ul>\n <li>over 150 industry experts covering over 7,000 global companies</li>\n <li>based on 400+ fundamental metrics</li>\n <li>and 178 materially important financial ESG risk factors</li>\n</ul>\n<p><img src=\"https://static.tigerbbs.com/7da4560ef863e32a307af7f3a93b28d1\" tg-width=\"640\" tg-height=\"426\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/078e47b8a22efff637d578f67d1bdbbf\" tg-width=\"640\" tg-height=\"308\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/26ac2395f9786b77c8f795cd0c659d9a\" tg-width=\"640\" tg-height=\"847\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: Refinitiv)</i></p>\n<p><img src=\"https://static.tigerbbs.com/2c212bc0cfadad173dc51c91fbee9438\" tg-width=\"640\" tg-height=\"435\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: Interactive Brokers)</i></p>\n<ul>\n <li>Reuters ranks BABA as in the bottom 30% of its peers on actual financial ESG risk</li>\n <li>in the top 40% in terms of environmental issues</li>\n <li>bottom 30% for social</li>\n <li>bottom 20% for corporate governance</li>\n <li>and near the very bottom of its industry on controversies</li>\n <li>for a combined score that's in the bottom 10% of its peers</li>\n <li>which is why BABA's dependability score fell from 75% to 68% and resulted in a downgrade from 11/12 to 10/12 speculative quality (about two months ago)</li>\n <li>and why I'm looking to invest a maximum of $100K into BABA vs. $1 million into far lower risk Amazon</li>\n <li>risks with BABA are far higher than with AMZN</li>\n</ul>\n<p>When no less than 10 of the world's most reputable risk assessors say something is important to long-term financial risk for a company you can be sure that Dividend Kings will include it in our 61 metric safety model and 126 point quality score (converted to a 100% scale).</p>\n<ul>\n <li>there is no such thing as a \"risk-free\" company</li>\n <li>factoring in all material financial risks is how you determine whether a company is appropriate for your needs</li>\n <li>and how we determine the margin of safety required to compensate us for that risk and thus determine potentially good buy prices or better</li>\n <li>no average investor can ever be a true expert on a company</li>\n <li>but DK knows where to find the most reliable expert data to create a comprehensive safety, dependability, and quality score that includes every major risk factor a company has</li>\n</ul>\n<p>No less than Ben Graham, the father of securities analysis considered qualitative factors critical to making prudent long-term investing decisions.</p>\n<blockquote>\n <i>... a satisfactory statistical exhibition is a necessary though by no means a sufficient condition for a favorable decision by the analyst.\"</i>-Benjamin Graham, Security Analysis (1951 ed.), Page 76\n</blockquote>\n<p>In other words, Graham considered a combination of quantitative and qualitative analysis, looking at the past, present, and likely future, to be the optimal strategy for making sound long-term investments.</p>\n<ul>\n <li>Dividend Kings uses risk ratings from eight of the world's most reputable agencies</li>\n <li>if fundamentals weaken our model will know it and our scores, ratings, and recommendations will change accordingly</li>\n</ul>\n<p>Bottom Line: Alibaba Is Set To Soar And Too Cheap To Ignore</p>\n<p>I can't tell you what any stock will do over the next few weeks, months or even a year or two.</p>\n<ul>\n <li>according to JPMorgan Asset Management, 92% of 12-month returns are a function of luck</li>\n <li>over 10+ years 90% to 91% of returns are a function of fundamentals</li>\n <li>over the long-term fundamentals are 11X as powerful as luck</li>\n</ul>\n<p>Alibaba represented one of the most undervalued hyper-growth tech blue-chips before this interest rate pullback in tech began.</p>\n<p>Alibaba's recent decline has been sharper than many peers, which isn't justified by its recent earnings results, or overall fundamentals.</p>\n<p>The long-term growth outlook has gotten better, not worse.</p>\n<p>While BABA will always be an inherently speculative company, for those comfortable with the risk profile, a 42% margin of safety more than compensate for the risks you're facing.</p>\n<p>In the coming years, BABA has the potential to deliver Buffett-like returns that are almost 6X the risk-adjusted returns of the S&amp;P 500.</p>\n<p>Eventually, the cash pile will grow so large, the company will be forced to start buying back stocks and paying dividends.</p>\n<p>A modest investment in BABA today could fund a comfortable or even lavish retirement purely from future dividends in a few decades.</p>\n<p>Prudent long-term investors know that through a disciplined application of financial science we never have to pray for luck. We make our own luck over time.</p>\n<p>When it comes to Alibaba, as close to a perfect hyper-growth blue-chip investment as exists on Wall Street today, the time to make our own luck is now.</p>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>6 Reasons Alibaba Is Set To Soar And Too Cheap To Ignore</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\n6 Reasons Alibaba Is Set To Soar And Too Cheap To Ignore\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-03-02 20:17 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4410621-six-reasons-alibaba-is-too-cheap-to-ignore><strong>Seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nRising interest rates have caused a modest dip in stocks, and a pullback in tech stocks. Some individual companies have fallen into bear markets.\nAlibaba represents one of the highest quality...</p>\n\n<a href=\"https://seekingalpha.com/article/4410621-six-reasons-alibaba-is-too-cheap-to-ignore\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"BABA":"阿里巴巴","09988":"阿里巴巴-W"},"source_url":"https://seekingalpha.com/article/4410621-six-reasons-alibaba-is-too-cheap-to-ignore","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1169004570","content_text":"Summary\n\nRising interest rates have caused a modest dip in stocks, and a pullback in tech stocks. Some individual companies have fallen into bear markets.\nAlibaba represents one of the highest quality (though speculative) hyper-growth blue-chips you can buy today. It began the tech pullback highly undervalued and is now 42% undervalued.\nPost earnings, when management updated analysts on regulatory risks, the LT growth consensus from all 59 analysts went up from 22.3% to 26.0% CAGR. The growth outlook has improved.\nYet BABA is now trading at some of the lowest valuations in its history, resulting in 27% CAGR consensus return potential through 2027, and 6X the risk-adjusted expected returns of the S&P 500 for the next five years.\nThanks to the potential to become one of the best dividend growth blue-chips of tomorrow, I've invested almost $50,000 into BABA, and am willing to invest up to $100K if it keeps falling in the short term. For those comfortable with the complex risk profile of this company, and who use proper diversification and prudent risk management, BABA represents a potentially life-changing and rich retirement dream-making long-term investment opportunity.\nThis idea was discussed in more depth with members of my private investing community, The Dividend Kings.Get started today »\n\nIt's been a volatile few weeks for stocks, but tech stocks in particular.\nWhile the S&P 500 is just barely off its recent all-time highs, the Nasdaq has fallen 6%. And of course, it's a market of stocks, not a stock market. Individual tech stocks are in corrections or even bear markets.\n\ntech stocks in general, are now in a pullback\ninduced by rising rate concerns\n\nWhy Rising Rates Are NOT A Concern For Prudent Long-Term Investors\nIn the modern era, primarily the last 25 years, all stocks have done well in rising long-term rate environments.\n(Source: Ben Carlson)\n\ngrowth, value, small, large, didn't matter, stocks went up as rates rose\n\n\nA study from JPMorgan(NYSE:JPM)found that from 1963 through 2019 stocks generally went up as long as 10-year yields were under 5%.\nGoldman Sachs'(NYSE:GS)head of quantitative research finds that the rate of interest rate is more important than the actual rate itself\n37+ basis points per month is the tipping point strongly correlated with short-term corrections\nin the last month, 10-year yields are up 39 basis points\na level that is historically correlated with mild and short market declines\nin other words, this stock market dip is 100% normal and expected by prudent investors who understand market history\n\nEven so-called \"bond alternatives,\" such as REITs, are not hurt by rising long-term rates.\n\nFrom 1972 to 2018 the % of REIT total returns explained by 10-year yields was just 2%\nhad you been able to predict interest rates with perfect precision, you couldn't have predicted actual REIT returns\n\nPrudent long-term investors know that you don't actually have to predict interest rates to be successful.\n\nlong-term interest rates are just one of many factors that determine company success over time\nand have a relatively small impact on fundamental growth rates\nbond prices are 100% a function of credit quality and LT interest rates\nstock prices are 91% a function (over the long-term) of fundamentals and valuations\nother than generating income, stocks and bonds are different asset classes that are nothing alike\nno stock is EVER a true \"Bond alternative\" because of this fundamental fact\n\n\n\nIf you focus on the trinity of yield + growth + valuation you are optimizing the fundamentals that drive 91% of long-term stock returns.\n\ncombining the 3 core fundamentals of long-term total returns with prudent risk management = practicing disciplined financial science\n\nMy Personal Phoenix Retirement Portfolio Fundamentals (75% Dividend Stocks/25% Growth Stocks)\n\naverage quality: 10.7/12 SWAN vs. 10.9 average aristocrat\naverage safety score: 4.8/5 very safe vs. 4.7 average aristocrat\naverage credit rating: A- stable vs. A- stable average aristocrat (2.5% 30-year bankruptcy risk)\nthe yield on cost: 3.8%\ncurrent yield: 3.3% vs. 1.6% S&P, 2.1%dividend aristocrats (our equity benchmark) and1.8% a 60/40 stock/bond portfolio\nMorningstar long-term growth forecast: 16.2% CAGRvs. 6.4% S&P 500 & 7.0% dividend aristocrats\nDividend growth forecast: 7.0% CAGR= almost 4X the rate of inflation, double every decade (every 15-years in inflation-adjusted dollars)\nweighted average forward PE: 16.6 vs. 18.9 historical norm vs. 21.9 S&P 500\naverage discount to fair value (Morningstar estimate): 12%vs. -32% S&P 500 and -13% aristocrats\n5-year analyst consensus total return potential: 3.3% yield + 16.2% CAGR long-term growth +2.6% CAGR valuation boost =22.1%CAGRvs. 6.5% S&P 500\nRisk-Adjusted Expected Return: 16.2% CAGRvs. 4.0% CAGR S&P 500 (4.0X market's expected return)\nLT Consensus Total Return Potential:3.3% yield on cost + 16.2% growth =19.5% CAGRvs. 8.0% S&P 500 and 9.1% dividend aristocrats\n\nHow does a double the market's yield and LT growth consensus sound?\nHow about the potential to quadruple the S&P 500's returns over the next five years and more than double the market's long-term consensus return potential?\nYou can't find that in any index fund, you have to build yourself. That's what DK Phoenix has been doing for almost a year, via a combination of opportunistic limit buying and dollar-cost averaging.\n\nI've invested about $500,000 of my life savings into the DK Phoenix strategy\nI'm definitely eating my own cooking\n\nThe results so far have been spectacular. 40% gains from a portfolio that started out 100% bonds and has been buying every single day, including during record highs and overvalued markets.\nMore importantly, this portfolio is generating an ocean of very safe, and steadily growing dividends.\n\nduring the Great Recession S&P 500 dividends down 25%\nthis portfolio's dividends were flat\n\nHowever, I want to point out how the potential combination of strong yield + fantastic growth potential and attractive valuations means this portfolio is potentially set up for returns on par with the greatest investors in history.\n\nBut not from some complex or risky asset you have to manage and tie up your money in for seven to 15 years (as with hedge funds), but a 100% liquid world-class blue-chip investment.\n\nblue-chip dividend investing at its finest\nhigh-probability/low risk buys that are 91% likely to meet our goals over the long-term\n\nNote that this portfolio is 25% growth stocks, though every growth company is one I expect to eventually pay a dividend.\nWhether it takes 5 or 50 years doesn't matter to me, because I have 75% of my portfolio generating over $20,000 per year in very safe income that rises in any economic or market condition.\nWhy I'm Backing Up The Truck On Alibaba In This Tech Pullback\nMy personal Phoenix retirement portfolio is what tracks every Dividend Kings Daily Blue-Chip Deal Video Recommendation.\n\n\nI've bought Alibaba (BABA) 87 times since April 2020\ninvesting a total of about $47,000\nabout 6.9% of my personal Phoenix portfolio (100 companies)\nmy personal risk cap on BABA is $100,000 for the next 20 years, 10X less than what I plan to invest in Amazon(NASDAQ:AMZN)\nmy goal is to invest $1 million into Amazon in my lifetime, as fast as I can\nbut still a potentially life-changing and rich retirement making investment (see reason five)\n\nWhy am I willing to put up to $100,000 of my hard-earned savings to work in this speculative hyper-growth blue-chip?\nFor the same 6 reasons that BABA at today's outrageously attractive valuation might be just what your diversified and prudently risk-managed portfolio needs.\nReason 1: An Extremely High-Quality Company\nThe Dividend Kings motto is \"Quality first and prudent valuation and sound risk management always.\"\nAlibaba Overall Quality: 80% = 10/12 Speculative SWAN\n\n\n\nBABA\nFinal Score\nRating\n\n\nBalance Sheet Safety\n88%\n5/5 Very Safe\n\n\nBusiness Model\n90%\n3/3 Wide and Stable Moat\n\n\nDependability\n68%\n2/4 Above-Average Dependability\n\n\nTotal\n80%\n10 (SWAN) - Speculative\n\n\n\n(Source:Dividend Kings Safety & Quality Tool) updated at the start and end of each day\n\nunchanged from last quarter\n\nDK overall quality scores factor in about 100 fundamental metrics covering\n\ndividend safety\nbalance sheet strength\nshort and long-term bankruptcy risk\naccounting and corporate fraud\nprofitability and business model\nlong-term sustainability\nmanagement quality\ndividend friendly corporate culture/income dependability\n\nAlibaba Is the 136th Highest Quality Master List Company (Out of 490)\n\n(Source: DK Safety & Quality Tool) updated at the end of each day, sorted by overall quality score\nThe DK Master List includes every dividend aristocrat, king, champion, and 12/12 Ultra SWAN quality company. Among the highest quality companies on earth, BABA ranks 136th.\nAlibaba's 80% quality score means its similar in quality to such 10/12 SWANs, 11/12 Super SWANs, and 12/12 Ultra SWANs as\n\nGeneral Dynamics (GD): non-speculative dividend aristocrat\nsalesforce.com (CRM): non - speculative hyper-growth\nRoyal Bank of Canada (RY): non - speculative\nUnitedHealth Group (UNH): non - speculative\nFacebook (FB): non - speculative hyper-growth\nCisco (CSCO): non - speculative\nMagellan Midstream Partners (MMP) - non-speculative\nLockheed Martin (LMT) - non -speculative\nTexas Instruments (TXN) - non-speculative\nBritish American Tobacco (BTI) - non-speculative\n\nAll told, our quality score includes 137 fundamental metrics pertaining to dividend safety, long-term dependability, and total returns. Every metric was selected based on\n\ndecades of empirical data\nthe experience of the greatest investors in history\neight rating agencies\nand what blue-chip economists and analyst firms consider most closely correlated to a company's long-term success.\n\nOur goal is to ensure we see fundamental deterioration coming before dividends get cut and a company, in a worst-case scenario, goes bankrupt.\n\neven dividend aristocrats can fail (just ask GE or CTL investors)\neven dividend aristocrats can go bankrupt (just ask Kmart or Winn-Dixie investors)\n\nThere are no sacred cows in the Dividend Kings universe. Where the fundamentals lead we always follow.\n\nthe essence of financial science\n\nReason 2: Remarkable Long-Term Growth Potential\n\n(Source: FactSet Research Terminal)\n\naccording to FactSet the median LT growth consensus from all 59 analysts that cover BABA is 26.0% CAGR\ncollectively these 59 experts know BABA better than anyone other than management\npre-earnings growth consensus was 22.3%\n\n\n\nYCharts LT growth consensus is less bullish but still showing 20% hyper-growth\n\n\n(Source: FAST Graphs, FactSet Research)\n\n5 analyst median FAST Graphs consensus is 25.3% CAGR LT growth\n\nAlibaba Medium-Term Growth Consensus\n\n\n\nMetric\nFiscal 2021 Consensus\n2022 consensus growth\n2023 consensus growth\n2024 consensus growth\n2025 consensus growth\n2026 consensus growth\n\n\nEPS\n39%\n15%\n24%\n23%\n20%\n16%\n\n\nOwner Earnings (Buffett smoothed out FCF)\n-3%\n162%\nNA\nNA\nNA\nNA\n\n\nOperating Cash Flow\n45%\n11%\n18%\n29%\nNA\nNA\n\n\nFree cash flow\n52%\n-1%\n25%\n24%\nNA\nNA\n\n\nEBITDA\n58%\n24%\n23%\nNA\nNA\nNA\n\n\nEBIT (operating profit)\n29%\n40%\n30%\nNA\nNA\nNA\n\n\n\n(Source: FAST Graphs, FactSet Research Terminal)\n20% to 26% CAGR LT growth consensus is one of the fastest of any company on earth, much less a $650 billion behemoth like BABA.\nWhere is BABA's remarkable growth expected to come from?\n\n(Source: earnings presentation)\n\nAlibaba has almost 1 billion users\nand is one of the fastest-growing cloud computing companies on earth\n#1 in cloud computing in China\n\n\n(Source: earnings presentation)\n\nAlibaba is the Amazon/Alphabet/Facebook/PayPal/Microsoft of China\nit's basically a superior quality Chinese Nasdaq index\njust as Amazon is a superior quality alternative to the US Nasdaq\nexcept that BABA has even more optionality than Amazon courtesy of several\"Super Apps\"of which the US has no equivalent\nSuper Apps are basically all the apps you use on a daily basis in one, and in China, they dominate the lives of almost 1.5 billion people\necosystems of steroids, and the ultimate wide-moat businesses\nthe only effective limitation is government regulations (more on this in the risk profile)\n\n\n(Source: FactSet Research Terminal)\n\n27% annualized revenue growth through 2026\nvs. 19% for Amazon\n34% CAGR cloud computing revenue growth\ncore Chinese commerce sales growth 28% CAGR\n\nWith almost 1.5 billion Chinese consumers to tap into, Alibaba's growth runway is very long.\n\nits optionality is among the best of any company on earth\npotentially superior to even Amazon's\n\nAlibaba Consensus Profitability Forecast\n\n\n\nYear\nSales\nFCF\nEBITDA\nEBIT\nNet Income\n\n\n2020\n$71,376\n$18,634.0\n$22,077.0\n$12,803.0\n$20,902.0\n\n\n2021\n$109,049.0\n$30,666.0\n$32,294.0\n$18,332.0\n$26,210.0\n\n\n2022\n$142,453.0\n$33,923.0\n$40,043.0\n$24,985.0\n$27,169.0\n\n\n2023\n$172,942.0\n$39,671.0\n$49,694.0\n$33,156.0\n$34,068.0\n\n\n2024\n$215,267.0\n$45,789.0\n$59,475.0\n$43,961.0\n$43,031.0\n\n\n2025\n$264,808.0\nNA\n$72,896.0\n$57,133.0\n$54,736.0\n\n\n2026\n$296,476.0\nNA\n$95,192.0\n$70,453.0\n$63,654.0\n\n\n\n\n\n\nYear\nFCF Margin\nEBITDA Margin\nEBIT Margin\nNet Margin\n\n\n2020\n26.1%\n30.9%\n17.9%\n29.3%\n\n\n2021\n28.1%\n29.6%\n16.8%\n24.0%\n\n\n2022\n23.8%\n28.1%\n17.5%\n19.1%\n\n\n2023\n22.9%\n28.7%\n19.2%\n19.7%\n\n\n2024\n21.3%\n27.6%\n20.4%\n20.0%\n\n\n2025\nNA\n27.5%\n21.6%\n20.7%\n\n\n2026\nNA\n32.1%\n23.8%\n21.5%\n\n\n\n(Source: FactSet Research Terminal)\n\nAlibaba is still relatively early in its growth cycle\ninvesting very heavily into R&D and growth capex: $12.6 billion in 2020\n$37.2 billion growth spending consensus in 2026\nyet analysts expect already impressive profitability to remain relatively stable during the next five years\n\nAlibaba Consensus Potential Future Dividend Forecast\n\n\n\nYear\nFCF/Share Consensus\nDividend Per Share (50% Payout Ratio)\nYield On Today's Cost\nConsensus Yield Potential\n2026 Consensus Price\n\n\n2020\n$6.98\n$3.49\n1.47%\nNA\nNA\n\n\n2021\n$8.95\n$4.48\n1.88%\n1.39%\n$323.00\n\n\n2022\n$10.70\n$5.35\n2.25%\n1.41%\n$379.00\n\n\n2023\n$13.84\n$6.92\n2.91%\n1.48%\n$466.00\n\n\n\n(Source: FactSet Research Terminal)\n\nif Alibaba were to start paying 50% of its FCF as dividends then by 2023 that would equal a yield on cost of almost 3% and 1.5% consensus yield\n\nWhy do I expect BABA to eventually start paying dividends?\nAlibaba Consensus Balance Sheet Forecast\n\n(Source: FactSet Research Terminal)\n\ndespite spending $37 billion to fund growth in 2026, analysts expect BABA to end fiscal 2026 with $275 billion in cash and $260 billion in net cash\nmore than Apple(NASDAQ:AAPL)had when it started buying back stock and paying dividends\n\nWhat's more, by 2024 alone analysts expect BABA's annual free cash flow to reach $46 billion.\n\n(Source: FactSet Research Terminal)\n\nif FCF grows at the 26% LT EPS growth consensus rate then by 2026 $73 billion in annual free cash flow\n\nThe bottom line on BABA is that it's the #1 global digital retailer but so much more. And it has the potential to make patient long-term investors extremely wealthy and eventually fund comfortable retirements from future dividends alone.\n\nwhat I call my \"Jack Ma retirement plan\"\n\nYet despite this incredible quality and growth potential, the market is mispricing BABA to a remarkable degree right now.\nReason 3: One Of Most Undervalued Tech Stocks In The World\n\n\n\nMetric\nHistorical Fair Value Multiples (all-years)\nFiscal 2021\nFiscal 2022\nFiscal 2023\n\n\nEarnings\n32.2\n$334\n$386\n$480\n\n\nOwner Earnings (Buffett smoothed out FCF)\n24.6\n$218\n$572\nNA\n\n\nOperating Cash Flow\n23.1\n$325\n$362\n$428\n\n\nFree Cash Flow\n30.7\n$338\n$336\n$421\n\n\nEBITDA\n33.2\n$389\n$485\n$597\n\n\nEBIT (operating income)\n45.1\n$298\n$416\n$541\n\n\nAverage\n$307\n$413\n$485\n\n\nCurrent Price\n$237.76\n\n\nDiscount To Fair Value\n23%\n42%\n51%\n\n\nUpside To Fair Value\n29%\n74%\n104%\n\n\nAnnualized Total Return Potential\nNA\n74%\n46%\n\n\n\n(Source: F.A.S.T. Graphs, FactSet Research)\nBABA is trading at a 42% discount to fiscal 2022 consensus fundamentals (which ends March 2022)\n\nA return to average historical fair value by the end of March 2023 would result in a 46% CAGR total return\n2021 fair value range: $336 to $572\n2021 Harmonic Average Fair Value (smooths out outliers): $413\n\nEven using the most conservative fair value of $336, BABA is still 29% undervalued and a potentially good speculative buy.\n(Source: FAST Graphs, FactSet Research)\n\non a blended PE basis, BABA is now tied for the lowest valuation in its history on the NYSE\nin other words, if you've ever wanted to buy BABA, now is the time\nvery likely to be near its eventual bottom\n\nI know that a lot of readers are now thinking \"sure, consensus estimates say BABA is a growth powerhouse, BUT what if analysts are wrong.\"\nThere is one thing we know for certain about all growth consensus estimates.\n\nthey are wrong\nthe question is how much\n\nAlibaba Analyst Scorecard\n\n\nDespite a highly complex business model analysts are relatively good at forecasting BABA's growth. Specifically, the company has only missed two-year earnings growth forecasts twice out of the six years that analysts have offered them.\n\nthe margin of error 20% to the upside and downside (modern era with lots of analyst coverage)\nlong-term growth consensus range: 20.0% to 26% CAGR\nlong-term growth consensus (from all 60 analysts ): 25.3% CAGR\nthe margin of error adjusted long-term growth consensus range: 16% to 32% CAGR\n\n\n(Source: F.A.S.T. Graphs, FactSet Research)\nThe current analyst consensus of 26.0% CAGR is similar to the growth rate of the last five years. The historical growth range since BABA came to the NYSE is 20% to 44% CAGR.\nThe secular growth catalysts represented by BABA's dominance in Chinese digital payments, banking, cloud computing, online retail, digital marketing, etc., means that I consider the analyst growth consensus range reasonable and achievable.\nStricter regulations are not expected to hamper BABA's growth significantly, according to the 60 analyst median consensus.\nReason 4: Total Return Potential That Could Make You Rich\n\nfor non-dividend stocks, total returns generated from growth and valuation mean reversion is the entire point for most investors\nBABA's consensus return potential is outstanding\n\nBABA 2023 Consensus Return Potential\n\n(Source: F.A.S.T. Graphs, FactSet Research)\nIf BABA grows as analysts expect through March 2023, and returns to historical fair value, then investors could expect\n\n102% total returns\n39.9% CAGR returns\nvs. 2.9% CAGR S&P 500\n14X better than the S&P 500\n\nAlibaba March 2027 Consensus Return Potential\n\n(Source: F.A.S.T. Graphs, FactSet Research) - actual consensus EPS estimates through 2026\nIf BABA grows as analysts expect through March 2027, and returns to historical fair value, then you could expect\n\n324% total returns, more than quadrupling your investment\n26.8% CAGR returns\nvs. 6.5% CAGR S&P 500\n\nOver the very long term, here's what analysts expect.\n\n0% yield + 26.0% CAGR growth = 26.0% CAGR total returns (16% to 32% CAGR range)\nvs. 8.0% CAGR S&P 500 and 9.1% CAGR dividend aristocrats\n\nReason 5: Total Return Potential That Could Turn Thousands Into Tens Of Millions Over Decades\nWhat does potential hyper-growth sustained over many years and decades look like? Generation wealth, that can not just fund your rich retirement, but that of your children and grandchildren as well.\nAlibaba 30-Year Monte Carlo Simulation, Statistical Inflation+ Tax Adjusted Total Return Forecast\n\n\n\nMonte Carlo simulation results for 5000 portfolios with $1,000 initial portfolio balance using available statistical model data from Jan 2015 to Dec 2020.Returns were modeled as correlated random samples from a multivariate normal distribution.The historical pre-tax return for the selected portfolio for this period was 21.09% mean return (14.38% CAGR) with a 36.62% standard deviation of annual returns.The simulated asset returns were adjusted based on provided tax assumptions.The simulated inflation model used historical inflation with a 1.75% mean and 0.94% standard deviation based on the Consumer Price Index (CPI-U) data from Jan 2015 to Dec 2020.The generated inflation samples were correlated with simulated asset returns based on historical correlations.The available historical data for the simulation inputs was constrained by Alibaba Group Holding Limited (BABA) [Oct 2014 - Feb 2021]. (Source: Portfolio Visualizer)\n\nBABA's historical returns are depressed because it's currently in a bear market. Yet even if it delivers historical returns over the next 30 years, the standard retirement time frame there is an 80% statistical probability that\n\n$1,000 invested today becomes $6,500 to $324,000\nadjusted-for inflation and taxes\nassuming top tax bracket, including for my home state of MN\n\nWhat if BABA is able to sustain approximately 15% CAGR growth for longer than 30 years? Then a modest investment today could transform into generation wealth.\nAlibaba 75-Year Monte Carlo Simulation, Statistical Inflation+ Tax Adjusted Total Return Forecast\n(Source: Portfolio Visualizer)\n\nwith a $75,000 total investment, made at the best valuations in five years, there is a very good statistical chance that I will eventually become an Alibaba millionaire\nthere is a decent chance that my children and grandchildren will be Alibaba billionaires\n\nReason 6: One Of The Most Reasonable And Prudent Growth Stocks You Can Buy Today\nI never recommend a company, much less put my own money at risk, without first knowing exactly how prudent a potential investment it is relative to the S&P 500, most people's default alternative.\n\nThe investment decision score is based on valuation and the three core principles of all successful long-term investors.\n\n\n\n\n\n\n\n(Source:Dividend Kings Automated Investment Decision Tool)\nBABA is one of the most reasonable and prudent hyper-growth stocks you can buy today. It offers\n\nobjectively superior quality to the average S&P 500 company (credit ratings and ROC)\nmuch faster growth (3 to 4X faster)\nmuch superior valuation (mirror image of the S&P 500)\n6X the 5-year risk-adjusted expected returns\n\nThat's assuming you're\n\ncomfortable with the risk profile (see dive section)\nown it within a diversified and prudently risk-managed portfolio\n\nAlibaba Risk Profile: Why BABA Isn't Right For EveryoneFundamental Risk Summary\n\n In our view, the most pressing risks to the Alibaba investment thesis are a sustained slowdown in Chinese consumption patterns, e-commerce competition, increased regulatory scrutiny, and the possibility that ancillary businesses divert management's attention and reduce profitability.China's e-commerce landscape has become increasingly competitive, with Pinduoduo registering faster GMV and user growth than Alibaba with the support of Tencent's traffic and its group-buying traffic generation method, and JD.com positioning itself as a credible rival through its fulfillment capability, quality assurance, and its partnerships with Tencent. These platforms do not yet have Alibaba's scale in China, but they specialize in specific products or services, or markets, which might impede Alibaba's growth.Alibaba is also subject to increased online and mobile payment regulation. Financial regulators in China have continuously scrutinized online and mobile payment services. Alibaba has persistently faced the issue of counterfeit and infringing goods on its marketplaces. Hangzhou government's assigning of representatives to work inside Alibaba also raise concerns of some investors, although there is no evidence of consequence of value destruction for Alibaba.Expansion into peripheral businesses might distract management, reduce profitability without materially improve Alibaba's ecosystem. While we're optimistic about Alibaba's ability to become a preferred partner for international retailers and consumer brands looking to sell in China, the firm does not enjoy the same network effect and brand recognition in other countries, and it may face challenges directly expanding in these markets...Like many other Chinese Internet companies listed in overseas markets, Alibaba operates under a\n variable interest entity, or VIE, structuredesigned to let companies bypass Chinese legal restrictions on foreign ownership in certain sectors.Alibaba's foreign investors will essentially hold shares of Alibaba's VIE domiciled in the Cayman Islands. We don't expect any legal challenges to VIE structures by the Chinese government in the future. However, if the legitimacy of Alibaba's related VIE is found to violate applicable law or regulation, Chinese regulatory authorities might take action against the VIE, including revoking the business and operating licenses of Alibaba's subsidiaries or the VIE, or discontinuing, restricting, or restructuring Alibaba's operations. Since the Chinese Ministry of Commerce has the jurisdiction to regulate VIEs, we believe overseas investors would have limited legal rights...Despite\n management's proven execution capabilities,\n we have concerns regarding Alibaba's corporate governance, which is reflected in our Poor equity stewardship rating.In our view,\n Alibaba is led by a capable and ambitious management team. Founder and former executive chairman Jack Ma has been the keeper of the flame since the company's founding in 1999. Under his leadership, Alibaba has become China's leading e-commerce player, accounting for the majority of transaction volume for China's online shopping industry.Over the past decade, Taobao has transformed the shopping behaviors of millions of Chinese consumers. We believe management has also done a commendable job developing and preserving Alibaba's wide economic moat by building several other leading online marketplaces and platforms such a Tmall, Juhuasuan, Alibaba.com, AliExpress, Alipay, AliCloud, and Ele.me. Although the company faces a potentially uneven long-term economic backdrop and new sources of competition in China,\n we remain confident that Alibaba can sustain its wide economic moat over the long term under its existing leadership.Ma's decision to step away from Alibaba's executive chairman role in 2019 and the company's board of directors will not affect our positive long-term bias for two reasons. First,\n we believe recent results demonstrate that Alibaba has a deep management bench,\n including current CEO Daniel Zhang(who was appointed CEO of Alibaba Group in May 2015, will assume the chairman role in 2019, and played a central role in the development of the Singles Day shopping event, building the Tmall platform from a regional to global business-to-consumer platform, and deploying several of Alibaba's \"New Retail\" strategies) and executive vice chairman Joe Tsai. Second, we believe Ma's involvement with the Alibaba Partnership--a group of core company managers--will allow him to stay involved with key strategic decisions...We harbor concerns about Alibaba's partnership structure, which might jeopardize the board's independence.The partnership is led by a committee of five, including Ma, executive vice chairman Joe Tsai, and CEO Daniel Zhang. The Alibaba Partnership has the exclusive right to nominate or appoint up to a simple majority of the members of its board of directors.Any board candidate it nominates is presented to shareholders for voting. If the candidate is not elected by shareholders, the partnership can appoint another candidate without a vote. That candidate will serve as an interim director until the next annual general meeting, where either the same candidate or yet another nominee proposed by Alibaba partners will stand for election.The current board of directors is composed of 11 directors, five of which are Alibaba Partnership nominees. Alibaba Partnership can also nominate or appoint two additional directors to the board, which would increase the number of directors to 13, and the Partnership will get majority control of the board.\n The Partnership essentially controls the board and limits the influence of outside shareholders.\" - Morningstar (emphasis added)\n\nMSCI, Reuters and Morningstar, as well as S&P, Fitch, and Moody's have concerns about BABA's corporate governance, which is factored into each company's respective rating on BABA's credit and material ESG risk (more on that later).\n\nall Chinese companies are speculative\nthus requiring a 5% higher margin of safety to be a potentially good buy (20% in the case of BABA)\ninvestors not comfortable with BABA's complex risk profile should not own it\nno company is right for everyone\n\nAlibaba ESG Risk Analysis: An Important Component Of A Company's Overall Financial Risk Profile (But Especially For Chinese Tech Companies)\n\ncritically important to anyone concerned about corporate governance and potential accounting fraud\n\nIn today's hyperpolarized political climate, some investors consider ESG to be political/personal ethics/opinion-driven nonsense.\nESG as measured by institutions is NOT simply the concern of \"woke\" and \"on-trend\" hippy millennials trying to virtue signal to impress Silicon Valley venture capitalists or social media followers.\n\n Companies with strong ESG profiles may be better positioned for future challenges and experience fewer instances of bribery, corruption, and fraud.\" - MSCI\n\nAccording to the world's best risk-assessors, ESG metrics are a critical component of a company's overall risk profile. Here's who considers ESG important and builds it into their safety models and ratings.\n\nBlackRock - #1 asset manager in the world\nMSCI - #1 indexing giant\nMorningstar\nReuters/Refinitiv\nISS (Institutional Shareholder Services) - #1 corporate proxy firm on earth\nS&P\nFitch\nMoody's\nDBRS (Canadian credit rating agency)\nAMBest (insurance industry rating agency)\n\nThe reason some investors consider ESG to be political is that some investors consider some industries to be inherently \"evil\" such as tobacco, energy, big tech, pharma, health insurers, fast-food, snack foods, and defense contractors.\n\nsuch opinions are personal and based on individual ethics\nESG scores as calculated by institutions are quantitatively based and focused on only fundamental financial risks to the underlying business\nthey are compared against industry peers and as objective as can be realistically expected\n\nPersonal ethical or political opinions are not what rating agencies or asset managers care about.\nMSCI rates over 2,800 global companies on 37 ESG metrics, using a quantitative and qualitative approach, just as all the rating agencies do, and Ben Graham recommended.\n\n Our global team of 185 experienced research analysts assesses thousands of data points across 37 ESG Key Issues, focusing on the intersection between a company's core business and the industry issues that can create significant risks and opportunities for the company. Companies are rated on an AAA-CCC scale\n relative to the standards and performance of their industry peers...\n\n\n\n The MSCI ESG rating model seeks to answer four key questions about companies:• What are the most significant ESG risks and opportunities facing a company and its industry?• How exposed is the company to those key risks and/or opportunities?• How well is the company managing key risks and opportunities?• What is the overall picture for the company and how does it compare to its global industry peers?\" - MSCI\n\n\n(Source: MSCI)\nThe ESG scores you find from the best risk-assessors in the world are not opinions based on political correctness.They use a quantitative approach to fundamental company risk analysis.One based on decades of historical data pertaining to minimizing the risk of fundamental deterioration, bankruptcy, and stock/bond investors getting wiped out.\n\nESG risk ratings + trends make up about 20% of the overall DK quality score for most companies that have an ESG rating from MSCI, Morningstar/Sustainalytics, and Reuters/Refinitiv\n\n\n\n(Source: MSCI)\n\nbased on the 12 material sustainability factors MSCI's 185 industry experts believe is important to financial risk for midstream companies, BABA scores are in the bottom 37% of its peers (below average)\nthat score is has been improving over the last four years\nthough it dipped one level in the 2020 annual update\n\nHow Morningstar/Sustainalytics Assesses Long-Term ESG Financial Risk\n\nMorningstar/Sustainalytics cares about material ESG variables that are historically correlated to a company's enterprise value (market cap + net debt)\nFinancial risk NOT political/personal ethical opinions are what Morningstar assesses\n20 fundamental metrics analyzed, compared to industry peers\n100 point risk scale\nlower is better\n\n\n\n\n\n\nEvery controversy surrounding BABA is factored into Morningstar ESG risk rating. That includes the controversies around anti-trust practices for which it's now under investigation by Chinese regulators.\n\nMorningstar considers this to be a medium ESG risk industry\nand management is doing an average job of managing that risk\nMorningstar scores BABA 26.2 \"medium risk\" in the bottom 25% of tech companies and in the top 43% of all 13,645 companies Morningstar rates\nrisk rating increased from 24.6 to 26.2 in the past year due to increasing regulatory concerns\n\nReuters/Refinitiv also provides ESG financial risk ratings.\n\nover 150 industry experts covering over 7,000 global companies\nbased on 400+ fundamental metrics\nand 178 materially important financial ESG risk factors\n\n\n\n\n(Source: Refinitiv)\n\n(Source: Interactive Brokers)\n\nReuters ranks BABA as in the bottom 30% of its peers on actual financial ESG risk\nin the top 40% in terms of environmental issues\nbottom 30% for social\nbottom 20% for corporate governance\nand near the very bottom of its industry on controversies\nfor a combined score that's in the bottom 10% of its peers\nwhich is why BABA's dependability score fell from 75% to 68% and resulted in a downgrade from 11/12 to 10/12 speculative quality (about two months ago)\nand why I'm looking to invest a maximum of $100K into BABA vs. $1 million into far lower risk Amazon\nrisks with BABA are far higher than with AMZN\n\nWhen no less than 10 of the world's most reputable risk assessors say something is important to long-term financial risk for a company you can be sure that Dividend Kings will include it in our 61 metric safety model and 126 point quality score (converted to a 100% scale).\n\nthere is no such thing as a \"risk-free\" company\nfactoring in all material financial risks is how you determine whether a company is appropriate for your needs\nand how we determine the margin of safety required to compensate us for that risk and thus determine potentially good buy prices or better\nno average investor can ever be a true expert on a company\nbut DK knows where to find the most reliable expert data to create a comprehensive safety, dependability, and quality score that includes every major risk factor a company has\n\nNo less than Ben Graham, the father of securities analysis considered qualitative factors critical to making prudent long-term investing decisions.\n\n... a satisfactory statistical exhibition is a necessary though by no means a sufficient condition for a favorable decision by the analyst.\"-Benjamin Graham, Security Analysis (1951 ed.), Page 76\n\nIn other words, Graham considered a combination of quantitative and qualitative analysis, looking at the past, present, and likely future, to be the optimal strategy for making sound long-term investments.\n\nDividend Kings uses risk ratings from eight of the world's most reputable agencies\nif fundamentals weaken our model will know it and our scores, ratings, and recommendations will change accordingly\n\nBottom Line: Alibaba Is Set To Soar And Too Cheap To Ignore\nI can't tell you what any stock will do over the next few weeks, months or even a year or two.\n\naccording to JPMorgan Asset Management, 92% of 12-month returns are a function of luck\nover 10+ years 90% to 91% of returns are a function of fundamentals\nover the long-term fundamentals are 11X as powerful as luck\n\nAlibaba represented one of the most undervalued hyper-growth tech blue-chips before this interest rate pullback in tech began.\nAlibaba's recent decline has been sharper than many peers, which isn't justified by its recent earnings results, or overall fundamentals.\nThe long-term growth outlook has gotten better, not worse.\nWhile BABA will always be an inherently speculative company, for those comfortable with the risk profile, a 42% margin of safety more than compensate for the risks you're facing.\nIn the coming years, BABA has the potential to deliver Buffett-like returns that are almost 6X the risk-adjusted returns of the S&P 500.\nEventually, the cash pile will grow so large, the company will be forced to start buying back stocks and paying dividends.\nA modest investment in BABA today could fund a comfortable or even lavish retirement purely from future dividends in a few decades.\nPrudent long-term investors know that through a disciplined application of financial science we never have to pray for luck. We make our own luck over time.\nWhen it comes to Alibaba, as close to a perfect hyper-growth blue-chip investment as exists on Wall Street today, the time to make our own luck is now.","news_type":1},"isVote":1,"tweetType":1,"viewCount":517,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":365932600,"gmtCreate":1614687993600,"gmtModify":1704774023321,"author":{"id":"3574558286837472","authorId":"3574558286837472","name":"Mxtinhzq","avatar":"https://static.tigerbbs.com/c915c3b8303c6bd800f52c911a79390f","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3574558286837472","authorIdStr":"3574558286837472"},"themes":[],"htmlText":"Should have gotten BABA at $220. Nonetheless still undervalue and great stock to keep for the long haul.&nbsp;","listText":"Should have gotten BABA at $220. Nonetheless still undervalue and great stock to keep for the long haul.&nbsp;","text":"Should have gotten BABA at $220. Nonetheless still undervalue and great stock to keep for the long haul.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/365932600","repostId":"1169004570","repostType":4,"repost":{"id":"1169004570","kind":"news","pubTimestamp":1614687445,"share":"https://ttm.financial/m/news/1169004570?lang=&edition=fundamental","pubTime":"2021-03-02 20:17","market":"us","language":"en","title":"6 Reasons Alibaba Is Set To Soar And Too Cheap To Ignore","url":"https://stock-news.laohu8.com/highlight/detail?id=1169004570","media":"Seekingalpha","summary":"Rising interest rates have caused a modest dip in stocks, and a pullback in tech stocks. Some individual companies have fallen into bear markets.Alibaba represents one of the highest quality  hyper-growth blue-chips you can buy today. It began the tech pullback highly undervalued and is now 42% undervalued.Post earnings, when management updated analysts on regulatory risks, the LT growth consensus from all 59 analysts went up from 22.3% to 26.0% CAGR. The growth outlook has improved.Yet BABA is ","content":"<p>Summary</p>\n<ul>\n <li>Rising interest rates have caused a modest dip in stocks, and a pullback in tech stocks. Some individual companies have fallen into bear markets.</li>\n <li>Alibaba represents one of the highest quality (though speculative) hyper-growth blue-chips you can buy today. It began the tech pullback highly undervalued and is now 42% undervalued.</li>\n <li>Post earnings, when management updated analysts on regulatory risks, the LT growth consensus from all 59 analysts went up from 22.3% to 26.0% CAGR. The growth outlook has improved.</li>\n <li>Yet BABA is now trading at some of the lowest valuations in its history, resulting in 27% CAGR consensus return potential through 2027, and 6X the risk-adjusted expected returns of the S&amp;P 500 for the next five years.</li>\n <li>Thanks to the potential to become one of the best dividend growth blue-chips of tomorrow, I've invested almost $50,000 into BABA, and am willing to invest up to $100K if it keeps falling in the short term. For those comfortable with the complex risk profile of this company, and who use proper diversification and prudent risk management, BABA represents a potentially life-changing and rich retirement dream-making long-term investment opportunity.</li>\n <li>This idea was discussed in more depth with members of my private investing community, The Dividend Kings.Get started today »</li>\n</ul>\n<p>It's been a volatile few weeks for stocks, but tech stocks in particular.</p>\n<p><img src=\"https://static.tigerbbs.com/54960030434467240b8c2876e6eaab19\" tg-width=\"640\" tg-height=\"389\" referrerpolicy=\"no-referrer\">While the S&amp;P 500 is just barely off its recent all-time highs, the Nasdaq has fallen 6%. And of course, it's a market of stocks, not a stock market. Individual tech stocks are in corrections or even bear markets.</p>\n<ul>\n <li>tech stocks in general, are now in a pullback</li>\n <li>induced by rising rate concerns</li>\n</ul>\n<p>Why Rising Rates Are NOT A Concern For Prudent Long-Term Investors</p>\n<p>In the modern era, primarily the last 25 years, all stocks have done well in rising long-term rate environments.</p>\n<p><img src=\"https://static.tigerbbs.com/790f8160df564e9692be64a3eb0e396f\" tg-width=\"640\" tg-height=\"484\" referrerpolicy=\"no-referrer\"><i>(Source: Ben Carlson)</i></p>\n<ul>\n <li>growth, value, small, large, didn't matter, stocks went up as rates rose</li>\n</ul>\n<ul>\n <li>A study from JPMorgan(NYSE:JPM)found that from 1963 through 2019 stocks generally went up as long as 10-year yields were under 5%.</li>\n <li>Goldman Sachs'(NYSE:GS)head of quantitative research finds that the rate of interest rate is more important than the actual rate itself</li>\n <li>37+ basis points per month is the tipping point strongly correlated with short-term corrections</li>\n <li><b>in the last month, 10-year yields are up 39 basis points</b></li>\n <li>a level that is historically correlated with mild and short market declines</li>\n <li>in other words, this stock market dip is 100% normal and expected by prudent investors who understand market history</li>\n</ul>\n<p>Even so-called \"bond alternatives,\" such as REITs, are not hurt by rising long-term rates.</p>\n<ul>\n <li>From 1972 to 2018 the % of REIT total returns explained by 10-year yields was just 2%</li>\n <li>had you been able to predict interest rates with perfect precision, you couldn't have predicted actual REIT returns</li>\n</ul>\n<p>Prudent long-term investors know that you don't actually have to predict interest rates to be successful.</p>\n<ul>\n <li>long-term interest rates are just one of many factors that determine company success over time</li>\n <li>and have a relatively small impact on fundamental growth rates</li>\n <li>bond prices are 100% a function of credit quality and LT interest rates</li>\n <li>stock prices are 91% a function (over the long-term) of fundamentals and valuations</li>\n <li>other than generating income, stocks and bonds are different asset classes that are nothing alike</li>\n <li><b>no stock is EVER a true \"Bond alternative\" because of this fundamental fact</b></li>\n</ul>\n<p><img src=\"https://static.tigerbbs.com/6deb7a5ba69273298a5256674c2dd2e8\" tg-width=\"640\" tg-height=\"526\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/74ba0ed8c210f5a079516c7da4f40e80\" tg-width=\"716\" tg-height=\"738\" referrerpolicy=\"no-referrer\"></p>\n<p>If you focus on the trinity of yield + growth + valuation you are optimizing the fundamentals that drive 91% of long-term stock returns.</p>\n<ul>\n <li>combining the 3 core fundamentals of long-term total returns with prudent risk management = practicing disciplined financial science</li>\n</ul>\n<p><b>My Personal Phoenix Retirement Portfolio Fundamentals (75% Dividend Stocks/25% Growth Stocks)</b></p>\n<ul>\n <li>average quality: 10.7/12 SWAN vs. 10.9 average aristocrat</li>\n <li>average safety score: 4.8/5 very safe vs. 4.7 average aristocrat</li>\n <li>average credit rating: A- stable vs. A- stable average aristocrat (2.5% 30-year bankruptcy risk)</li>\n <li><b>the yield on cost: 3.8%</b></li>\n <li><b>current yield: 3.3% vs. 1.6% S&amp;P, 2.1%</b>dividend aristocrats (our equity benchmark) and<b>1.8% a 60/40 stock/bond portfolio</b></li>\n <li><b>Morningstar long-term growth forecast: 16.2% CAGR</b>vs. 6.4% S&amp;P 500 &amp; 7.0% dividend aristocrats</li>\n <li><b>Dividend growth forecast: 7.0% CAGR</b>= almost 4X the rate of inflation, double every decade (every 15-years in inflation-adjusted dollars)</li>\n <li>weighted average forward PE: 16.6 vs. 18.9 historical norm vs. 21.9 S&amp;P 500</li>\n <li><b>average discount to fair value (Morningstar estimate): 12%</b>vs. -32% S&amp;P 500 and -13% aristocrats</li>\n <li><b>5-year analyst consensus total return potential</b>: 3.3% yield + 16.2% CAGR long-term growth +2.6% CAGR valuation boost =<b>22.1%CAGR</b>vs. 6.5% S&amp;P 500</li>\n <li><b>Risk-Adjusted Expected Return: 16.2% CAGR</b>vs. 4.0% CAGR S&amp;P 500 (<b>4.0X market's expected return</b>)</li>\n <li><i><b>LT Consensus Total Return Potential:</b></i><i>3.3% yield on cost + 16.2% growth =</i><i><b>19.5% CAGR</b></i><i>vs. 8.0% S&amp;P 500 and 9.1% dividend aristocrats</i></li>\n</ul>\n<p>How does a double the market's yield and LT growth consensus sound?</p>\n<p>How about the potential to quadruple the S&amp;P 500's returns over the next five years and more than double the market's long-term consensus return potential?</p>\n<p>You can't find that in any index fund, you have to build yourself. That's what DK Phoenix has been doing for almost a year, via a combination of opportunistic limit buying and dollar-cost averaging.</p>\n<ul>\n <li>I've invested about $500,000 of my life savings into the DK Phoenix strategy</li>\n <li>I'm definitely eating my own cooking</li>\n</ul>\n<p>The results so far have been spectacular. 40% gains from a portfolio that started out 100% bonds and has been buying every single day, including during record highs and overvalued markets.</p>\n<p>More importantly, this portfolio is generating an ocean of very safe, and steadily growing dividends.</p>\n<ul>\n <li>during the Great Recession S&amp;P 500 dividends down 25%</li>\n <li>this portfolio's dividends were flat</li>\n</ul>\n<p>However, I want to point out how the potential combination of strong yield + fantastic growth potential and attractive valuations means this portfolio is potentially set up for returns on par with the greatest investors in history.</p>\n<p><img src=\"https://static.tigerbbs.com/d1567a4569f51c6d5f83e6dd572db55c\" tg-width=\"640\" tg-height=\"412\" referrerpolicy=\"no-referrer\"></p>\n<p>But not from some complex or risky asset you have to manage and tie up your money in for seven to 15 years (as with hedge funds), but a 100% liquid world-class blue-chip investment.</p>\n<ul>\n <li>blue-chip dividend investing at its finest</li>\n <li>high-probability/low risk buys that are 91% likely to meet our goals over the long-term</li>\n</ul>\n<p>Note that this portfolio is 25% growth stocks, though every growth company is one I expect to eventually pay a dividend.</p>\n<p>Whether it takes 5 or 50 years doesn't matter to me, because I have 75% of my portfolio generating over $20,000 per year in very safe income that rises in any economic or market condition.</p>\n<p>Why I'm Backing Up The Truck On Alibaba In This Tech Pullback</p>\n<p>My personal Phoenix retirement portfolio is what tracks every Dividend Kings Daily Blue-Chip Deal Video Recommendation.</p>\n<p><img src=\"https://static.tigerbbs.com/ccec58a2a2e51918ad4619f5b10ae7b9\" tg-width=\"640\" tg-height=\"140\" referrerpolicy=\"no-referrer\"></p>\n<ul>\n <li>I've bought Alibaba (BABA) 87 times since April 2020</li>\n <li>investing a total of about $47,000</li>\n <li>about 6.9% of my personal Phoenix portfolio (100 companies)</li>\n <li>my personal risk cap on BABA is $100,000 for the next 20 years, 10X less than what I plan to invest in Amazon(NASDAQ:AMZN)</li>\n <li>my goal is to invest $1 million into Amazon in my lifetime, as fast as I can</li>\n <li>but still a potentially life-changing and rich retirement making investment (see reason five)</li>\n</ul>\n<p>Why am I willing to put up to $100,000 of my hard-earned savings to work in this speculative hyper-growth blue-chip?</p>\n<p>For the same 6 reasons that BABA at today's outrageously attractive valuation might be just what your diversified and prudently risk-managed portfolio needs.</p>\n<p>Reason 1: An Extremely High-Quality Company</p>\n<p>The Dividend Kings motto is \"Quality first and prudent valuation and sound risk management always.\"</p>\n<p>Alibaba Overall Quality: 80% = 10/12 Speculative SWAN</p>\n<table>\n <tbody>\n  <tr>\n   <td><b>BABA</b></td>\n   <td><b>Final Score</b></td>\n   <td><b>Rating</b></td>\n  </tr>\n  <tr>\n   <td>Balance Sheet Safety</td>\n   <td>88%</td>\n   <td>5/5 Very Safe</td>\n  </tr>\n  <tr>\n   <td>Business Model</td>\n   <td>90%</td>\n   <td>3/3 Wide and Stable Moat</td>\n  </tr>\n  <tr>\n   <td>Dependability</td>\n   <td>68%</td>\n   <td>2/4 Above-Average Dependability</td>\n  </tr>\n  <tr>\n   <td><b>Total</b></td>\n   <td><b>80%</b></td>\n   <td><b>10 (SWAN) - Speculative</b></td>\n  </tr>\n </tbody>\n</table>\n<p><i>(Source:Dividend Kings Safety &amp; Quality Tool) updated at the start and end of each day</i></p>\n<ul>\n <li>unchanged from last quarter</li>\n</ul>\n<p>DK overall quality scores factor in about 100 fundamental metrics covering</p>\n<ul>\n <li>dividend safety</li>\n <li>balance sheet strength</li>\n <li>short and long-term bankruptcy risk</li>\n <li>accounting and corporate fraud</li>\n <li>profitability and business model</li>\n <li>long-term sustainability</li>\n <li>management quality</li>\n <li>dividend friendly corporate culture/income dependability</li>\n</ul>\n<p><b>Alibaba Is the 136th Highest Quality Master List Company (Out of 490)</b></p>\n<p><img src=\"https://static.tigerbbs.com/c259ff2db589224b1c883dfd27a06abd\" tg-width=\"640\" tg-height=\"220\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: DK Safety &amp; Quality Tool) updated at the end of each day, sorted by overall quality score</i></p>\n<p>The DK Master List includes every dividend aristocrat, king, champion, and 12/12 Ultra SWAN quality company. Among the highest quality companies on earth, BABA ranks 136th.</p>\n<p>Alibaba's 80% quality score means its similar in quality to such 10/12 SWANs, 11/12 Super SWANs, and 12/12 Ultra SWANs as</p>\n<ul>\n <li>General Dynamics (GD): non-speculative dividend aristocrat</li>\n <li>salesforce.com (CRM): non - speculative hyper-growth</li>\n <li>Royal Bank of Canada (RY): non - speculative</li>\n <li>UnitedHealth Group (UNH): non - speculative</li>\n <li>Facebook (FB): non - speculative hyper-growth</li>\n <li>Cisco (CSCO): non - speculative</li>\n <li>Magellan Midstream Partners (MMP) - non-speculative</li>\n <li>Lockheed Martin (LMT) - non -speculative</li>\n <li>Texas Instruments (TXN) - non-speculative</li>\n <li>British American Tobacco (BTI) - non-speculative</li>\n</ul>\n<p>All told, our quality score includes 137 fundamental metrics pertaining to dividend safety, long-term dependability, and total returns. Every metric was selected based on</p>\n<ul>\n <li>decades of empirical data</li>\n <li>the experience of the greatest investors in history</li>\n <li>eight rating agencies</li>\n <li>and what blue-chip economists and analyst firms consider most closely correlated to a company's long-term success.</li>\n</ul>\n<p>Our goal is to ensure we see fundamental deterioration coming before dividends get cut and a company, in a worst-case scenario, goes bankrupt.</p>\n<ul>\n <li>even dividend aristocrats can fail (just ask GE or CTL investors)</li>\n <li>even dividend aristocrats can go bankrupt (just ask Kmart or Winn-Dixie investors)</li>\n</ul>\n<p>There are no sacred cows in the Dividend Kings universe. Where the fundamentals lead we always follow.</p>\n<ul>\n <li>the essence of financial science</li>\n</ul>\n<p>Reason 2: Remarkable Long-Term Growth Potential</p>\n<p><img src=\"https://static.tigerbbs.com/7c6b6a726a78d0e0d012df46602fd475\" tg-width=\"640\" tg-height=\"132\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: FactSet Research Terminal)</i></p>\n<ul>\n <li>according to FactSet the median LT growth consensus from all 59 analysts that cover BABA is 26.0% CAGR</li>\n <li>collectively these 59 experts know BABA better than anyone other than management</li>\n <li>pre-earnings growth consensus was 22.3%</li>\n</ul>\n<p><img src=\"https://static.tigerbbs.com/b39eecccd04752aa11a27f8f8c8d6587\" tg-width=\"640\" tg-height=\"390\" referrerpolicy=\"no-referrer\"></p>\n<ul>\n <li>YCharts LT growth consensus is less bullish but still showing 20% hyper-growth</li>\n</ul>\n<p><img src=\"https://static.tigerbbs.com/9090a70c545a4c112f90b02d4de12131\" tg-width=\"640\" tg-height=\"395\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: FAST Graphs, FactSet Research)</i></p>\n<ul>\n <li>5 analyst median FAST Graphs consensus is 25.3% CAGR LT growth</li>\n</ul>\n<p>Alibaba Medium-Term Growth Consensus</p>\n<table>\n <tbody>\n  <tr>\n   <td><b>Metric</b></td>\n   <td><b>Fiscal 2021 Consensus</b></td>\n   <td><b>2022 consensus growth</b></td>\n   <td><b>2023 consensus growth</b></td>\n   <td><b>2024 consensus growth</b></td>\n   <td><b>2025 consensus growth</b></td>\n   <td><p><b>2026 consensus growth</b></p></td>\n  </tr>\n  <tr>\n   <td>EPS</td>\n   <td>39%</td>\n   <td>15%</td>\n   <td>24%</td>\n   <td>23%</td>\n   <td>20%</td>\n   <td>16%</td>\n  </tr>\n  <tr>\n   <td>Owner Earnings (Buffett smoothed out FCF)</td>\n   <td>-3%</td>\n   <td>162%</td>\n   <td>NA</td>\n   <td>NA</td>\n   <td>NA</td>\n   <td>NA</td>\n  </tr>\n  <tr>\n   <td>Operating Cash Flow</td>\n   <td>45%</td>\n   <td>11%</td>\n   <td>18%</td>\n   <td>29%</td>\n   <td>NA</td>\n   <td>NA</td>\n  </tr>\n  <tr>\n   <td>Free cash flow</td>\n   <td>52%</td>\n   <td>-1%</td>\n   <td>25%</td>\n   <td>24%</td>\n   <td>NA</td>\n   <td>NA</td>\n  </tr>\n  <tr>\n   <td>EBITDA</td>\n   <td>58%</td>\n   <td>24%</td>\n   <td>23%</td>\n   <td>NA</td>\n   <td>NA</td>\n   <td>NA</td>\n  </tr>\n  <tr>\n   <td>EBIT (operating profit)</td>\n   <td>29%</td>\n   <td>40%</td>\n   <td>30%</td>\n   <td>NA</td>\n   <td>NA</td>\n   <td>NA</td>\n  </tr>\n </tbody>\n</table>\n<p><i>(Source: FAST Graphs, FactSet Research Terminal)</i></p>\n<p>20% to 26% CAGR LT growth consensus is one of the fastest of any company on earth, much less a $650 billion behemoth like BABA.</p>\n<p>Where is BABA's remarkable growth expected to come from?</p>\n<p><img src=\"https://static.tigerbbs.com/7b04a7c47511897fa2d2e3170feaf91b\" tg-width=\"640\" tg-height=\"413\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: earnings presentation)</i></p>\n<ul>\n <li>Alibaba has almost 1 billion users</li>\n <li>and is one of the fastest-growing cloud computing companies on earth</li>\n <li>#1 in cloud computing in China</li>\n</ul>\n<p><img src=\"https://static.tigerbbs.com/d8d32d464a818f669520b792adf9971a\" tg-width=\"640\" tg-height=\"484\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: earnings presentation)</i></p>\n<ul>\n <li><b>Alibaba is the Amazon/Alphabet/Facebook/PayPal/Microsoft of China</b></li>\n <li>it's basically a superior quality Chinese Nasdaq index</li>\n <li>just as Amazon is a superior quality alternative to the US Nasdaq</li>\n <li>except that BABA has even more optionality than Amazon courtesy of several<b>\"Super Apps\"</b>of which the US has no equivalent</li>\n <li>Super Apps are basically all the apps you use on a daily basis in one, and in China, they dominate the lives of almost 1.5 billion people</li>\n <li>ecosystems of steroids, and the ultimate wide-moat businesses</li>\n <li>the only effective limitation is government regulations (more on this in the risk profile)</li>\n</ul>\n<p><img src=\"https://static.tigerbbs.com/9f0062920c271ce804438eca217557aa\" tg-width=\"640\" tg-height=\"338\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: FactSet Research Terminal)</i></p>\n<ul>\n <li>27% annualized revenue growth through 2026</li>\n <li>vs. 19% for Amazon</li>\n <li>34% CAGR cloud computing revenue growth</li>\n <li>core Chinese commerce sales growth 28% CAGR</li>\n</ul>\n<p>With almost 1.5 billion Chinese consumers to tap into, Alibaba's growth runway is very long.</p>\n<ul>\n <li>its optionality is among the best of any company on earth</li>\n <li>potentially superior to even Amazon's</li>\n</ul>\n<p>Alibaba Consensus Profitability Forecast</p>\n<table>\n <tbody>\n  <tr>\n   <td><b>Year</b></td>\n   <td><b>Sales</b></td>\n   <td><b>FCF</b></td>\n   <td><b>EBITDA</b></td>\n   <td><b>EBIT</b></td>\n   <td><b>Net Income</b></td>\n  </tr>\n  <tr>\n   <td>2020</td>\n   <td>$71,376</td>\n   <td>$18,634.0</td>\n   <td>$22,077.0</td>\n   <td>$12,803.0</td>\n   <td>$20,902.0</td>\n  </tr>\n  <tr>\n   <td>2021</td>\n   <td>$109,049.0</td>\n   <td>$30,666.0</td>\n   <td>$32,294.0</td>\n   <td>$18,332.0</td>\n   <td>$26,210.0</td>\n  </tr>\n  <tr>\n   <td>2022</td>\n   <td>$142,453.0</td>\n   <td>$33,923.0</td>\n   <td>$40,043.0</td>\n   <td>$24,985.0</td>\n   <td>$27,169.0</td>\n  </tr>\n  <tr>\n   <td>2023</td>\n   <td>$172,942.0</td>\n   <td>$39,671.0</td>\n   <td>$49,694.0</td>\n   <td>$33,156.0</td>\n   <td>$34,068.0</td>\n  </tr>\n  <tr>\n   <td>2024</td>\n   <td>$215,267.0</td>\n   <td>$45,789.0</td>\n   <td>$59,475.0</td>\n   <td>$43,961.0</td>\n   <td>$43,031.0</td>\n  </tr>\n  <tr>\n   <td>2025</td>\n   <td>$264,808.0</td>\n   <td>NA</td>\n   <td>$72,896.0</td>\n   <td>$57,133.0</td>\n   <td>$54,736.0</td>\n  </tr>\n  <tr>\n   <td>2026</td>\n   <td>$296,476.0</td>\n   <td>NA</td>\n   <td>$95,192.0</td>\n   <td>$70,453.0</td>\n   <td>$63,654.0</td>\n  </tr>\n </tbody>\n</table>\n<table>\n <tbody>\n  <tr>\n   <td><b>Year</b></td>\n   <td><b>FCF Margin</b></td>\n   <td><b>EBITDA Margin</b></td>\n   <td><b>EBIT Margin</b></td>\n   <td><b>Net Margin</b></td>\n  </tr>\n  <tr>\n   <td>2020</td>\n   <td>26.1%</td>\n   <td>30.9%</td>\n   <td>17.9%</td>\n   <td>29.3%</td>\n  </tr>\n  <tr>\n   <td>2021</td>\n   <td>28.1%</td>\n   <td>29.6%</td>\n   <td>16.8%</td>\n   <td>24.0%</td>\n  </tr>\n  <tr>\n   <td>2022</td>\n   <td>23.8%</td>\n   <td>28.1%</td>\n   <td>17.5%</td>\n   <td>19.1%</td>\n  </tr>\n  <tr>\n   <td>2023</td>\n   <td>22.9%</td>\n   <td>28.7%</td>\n   <td>19.2%</td>\n   <td>19.7%</td>\n  </tr>\n  <tr>\n   <td>2024</td>\n   <td>21.3%</td>\n   <td>27.6%</td>\n   <td>20.4%</td>\n   <td>20.0%</td>\n  </tr>\n  <tr>\n   <td>2025</td>\n   <td>NA</td>\n   <td>27.5%</td>\n   <td>21.6%</td>\n   <td>20.7%</td>\n  </tr>\n  <tr>\n   <td>2026</td>\n   <td>NA</td>\n   <td>32.1%</td>\n   <td>23.8%</td>\n   <td>21.5%</td>\n  </tr>\n </tbody>\n</table>\n<p><i>(Source: FactSet Research Terminal)</i></p>\n<ul>\n <li>Alibaba is still relatively early in its growth cycle</li>\n <li>investing very heavily into R&amp;D and growth capex: $12.6 billion in 2020</li>\n <li>$37.2 billion growth spending consensus in 2026</li>\n <li>yet analysts expect already impressive profitability to remain relatively stable during the next five years</li>\n</ul>\n<p><b>Alibaba Consensus Potential Future Dividend Forecast</b></p>\n<table>\n <tbody>\n  <tr>\n   <td><b>Year</b></td>\n   <td><b>FCF/Share Consensus</b></td>\n   <td><b>Dividend Per Share (50% Payout Ratio)</b></td>\n   <td><b>Yield On Today's Cost</b></td>\n   <td><b>Consensus Yield Potential</b></td>\n   <td><b>2026 Consensus Price</b></td>\n  </tr>\n  <tr>\n   <td>2020</td>\n   <td>$6.98</td>\n   <td>$3.49</td>\n   <td>1.47%</td>\n   <td>NA</td>\n   <td>NA</td>\n  </tr>\n  <tr>\n   <td>2021</td>\n   <td>$8.95</td>\n   <td>$4.48</td>\n   <td>1.88%</td>\n   <td>1.39%</td>\n   <td>$323.00</td>\n  </tr>\n  <tr>\n   <td>2022</td>\n   <td>$10.70</td>\n   <td>$5.35</td>\n   <td>2.25%</td>\n   <td>1.41%</td>\n   <td>$379.00</td>\n  </tr>\n  <tr>\n   <td><i><b>2023</b></i></td>\n   <td><i><b>$13.84</b></i></td>\n   <td><i><b>$6.92</b></i></td>\n   <td><i><b>2.91%</b></i></td>\n   <td><i><b>1.48%</b></i></td>\n   <td><i><b>$466.00</b></i></td>\n  </tr>\n </tbody>\n</table>\n<p><i>(Source: FactSet Research Terminal)</i></p>\n<ul>\n <li>if Alibaba were to start paying 50% of its FCF as dividends then by 2023 that would equal a yield on cost of almost 3% and 1.5% consensus yield</li>\n</ul>\n<p>Why do I expect BABA to eventually start paying dividends?</p>\n<p><b>Alibaba Consensus Balance Sheet Forecast</b></p>\n<p><img src=\"https://static.tigerbbs.com/61c78f5b92f0f7db55569cdd0cd8cd2f\" tg-width=\"640\" tg-height=\"258\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: FactSet Research Terminal)</i></p>\n<ul>\n <li>despite spending $37 billion to fund growth in 2026, analysts expect BABA to end fiscal 2026 with $275 billion in cash and $260 billion in net cash</li>\n <li>more than Apple(NASDAQ:AAPL)had when it started buying back stock and paying dividends</li>\n</ul>\n<p>What's more, by 2024 alone analysts expect BABA's annual free cash flow to reach $46 billion.</p>\n<p><img src=\"https://static.tigerbbs.com/a072c7a0e2793b347b635e08315d24bc\" tg-width=\"640\" tg-height=\"148\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: FactSet Research Terminal)</i></p>\n<ul>\n <li>if FCF grows at the 26% LT EPS growth consensus rate then by 2026 $73 billion in annual free cash flow</li>\n</ul>\n<p>The bottom line on BABA is that it's the #1 global digital retailer but so much more. And it has the potential to make patient long-term investors extremely wealthy and eventually fund comfortable retirements from future dividends alone.</p>\n<ul>\n <li>what I call my \"Jack Ma retirement plan\"</li>\n</ul>\n<p>Yet despite this incredible quality and growth potential, the market is mispricing BABA to a remarkable degree right now.</p>\n<p>Reason 3: One Of Most Undervalued Tech Stocks In The World</p>\n<table>\n <tbody>\n  <tr>\n   <td><b>Metric</b></td>\n   <td><b>Historical Fair Value Multiples (all-years)</b></td>\n   <td><b>Fiscal 2021</b></td>\n   <td><b>Fiscal 2022</b></td>\n   <td><b>Fiscal 2023</b></td>\n  </tr>\n  <tr>\n   <td>Earnings</td>\n   <td>32.2</td>\n   <td>$334</td>\n   <td>$386</td>\n   <td>$480</td>\n  </tr>\n  <tr>\n   <td>Owner Earnings (Buffett smoothed out FCF)</td>\n   <td>24.6</td>\n   <td>$218</td>\n   <td>$572</td>\n   <td>NA</td>\n  </tr>\n  <tr>\n   <td>Operating Cash Flow</td>\n   <td>23.1</td>\n   <td>$325</td>\n   <td>$362</td>\n   <td>$428</td>\n  </tr>\n  <tr>\n   <td>Free Cash Flow</td>\n   <td>30.7</td>\n   <td>$338</td>\n   <td>$336</td>\n   <td>$421</td>\n  </tr>\n  <tr>\n   <td>EBITDA</td>\n   <td>33.2</td>\n   <td>$389</td>\n   <td>$485</td>\n   <td>$597</td>\n  </tr>\n  <tr>\n   <td>EBIT (operating income)</td>\n   <td>45.1</td>\n   <td>$298</td>\n   <td>$416</td>\n   <td>$541</td>\n  </tr>\n  <tr>\n   <td><b>Average</b></td>\n   <td><b>$307</b></td>\n   <td><b>$413</b></td>\n   <td><b>$485</b></td>\n  </tr>\n  <tr>\n   <td>Current Price</td>\n   <td>$237.76</td>\n  </tr>\n  <tr>\n   <td><p><i><b>Discount To Fair Value</b></i></p></td>\n   <td><i><b>23%</b></i></td>\n   <td><i><b>42%</b></i></td>\n   <td><i><b>51%</b></i></td>\n  </tr>\n  <tr>\n   <td><i>Upside To Fair Value</i></td>\n   <td><i>29%</i></td>\n   <td><i>74%</i></td>\n   <td><i>104%</i></td>\n  </tr>\n  <tr>\n   <td><p><i><b>Annualized Total Return Potential</b></i></p></td>\n   <td><i><b>NA</b></i></td>\n   <td><i><b>74%</b></i></td>\n   <td><i><b>46%</b></i></td>\n  </tr>\n </tbody>\n</table>\n<p><i>(Source: F.A.S.T. Graphs, FactSet Research)</i></p>\n<p>BABA is trading at a 42% discount to fiscal 2022 consensus fundamentals (which ends March 2022)</p>\n<ul>\n <li>A return to average historical fair value by the end of March 2023 would result in a 46% CAGR total return</li>\n <li>2021 fair value range: $336 to $572</li>\n <li>2021 Harmonic Average Fair Value (smooths out outliers): $413</li>\n</ul>\n<p>Even using the most conservative fair value of $336, BABA is still 29% undervalued and a potentially good speculative buy.</p>\n<p><img src=\"https://static.tigerbbs.com/6c6cd6870a518767764bd87d37ec06d4\" tg-width=\"640\" tg-height=\"376\" referrerpolicy=\"no-referrer\"><i>(Source: FAST Graphs, FactSet Research)</i></p>\n<ul>\n <li>on a blended PE basis, BABA is now tied for the lowest valuation in its history on the NYSE</li>\n <li>in other words, if you've ever wanted to buy BABA, now is the time</li>\n <li>very likely to be near its eventual bottom</li>\n</ul>\n<p>I know that a lot of readers are now thinking \"sure, consensus estimates say BABA is a growth powerhouse, BUT what if analysts are wrong.\"</p>\n<p>There is one thing we know for certain about all growth consensus estimates.</p>\n<ul>\n <li>they are wrong</li>\n <li>the question is how much</li>\n</ul>\n<p><b>Alibaba Analyst Scorecard</b></p>\n<p><img src=\"https://static.tigerbbs.com/bd5201fe390f06c8cd94462a06114fdd\" tg-width=\"640\" tg-height=\"376\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/6b1da8d579e9049d31188aafb07d3c47\" tg-width=\"640\" tg-height=\"346\" referrerpolicy=\"no-referrer\"></p>\n<p>Despite a highly complex business model analysts are relatively good at forecasting BABA's growth. Specifically, the company has only missed two-year earnings growth forecasts twice out of the six years that analysts have offered them.</p>\n<ul>\n <li>the margin of error 20% to the upside and downside (modern era with lots of analyst coverage)</li>\n <li>long-term growth consensus range: 20.0% to 26% CAGR</li>\n <li>long-term growth consensus (from all 60 analysts ): 25.3% CAGR</li>\n <li>the margin of error adjusted long-term growth consensus range: 16% to 32% CAGR</li>\n</ul>\n<p><img src=\"https://static.tigerbbs.com/10e55ff4c0570b0156c5fc04134c6c90\" tg-width=\"640\" tg-height=\"456\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: F.A.S.T. Graphs, FactSet Research)</i></p>\n<p>The current analyst consensus of 26.0% CAGR is similar to the growth rate of the last five years. The historical growth range since BABA came to the NYSE is 20% to 44% CAGR.</p>\n<p>The secular growth catalysts represented by BABA's dominance in Chinese digital payments, banking, cloud computing, online retail, digital marketing, etc., means that I consider the analyst growth consensus range reasonable and achievable.</p>\n<p>Stricter regulations are not expected to hamper BABA's growth significantly, according to the 60 analyst median consensus.</p>\n<p>Reason 4: Total Return Potential That Could Make You Rich</p>\n<ul>\n <li>for non-dividend stocks, total returns generated from growth and valuation mean reversion is the entire point for most investors</li>\n <li>BABA's consensus return potential is outstanding</li>\n</ul>\n<p><b>BABA 2023 Consensus Return Potential</b></p>\n<p><img src=\"https://static.tigerbbs.com/ba5fce782ee2484df31380823cbd08d1\" tg-width=\"640\" tg-height=\"383\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: F.A.S.T. Graphs, FactSet Research)</i></p>\n<p>If BABA grows as analysts expect through March 2023, and returns to historical fair value, then investors could expect</p>\n<ul>\n <li>102% total returns</li>\n <li>39.9% CAGR returns</li>\n <li>vs. 2.9% CAGR S&amp;P 500</li>\n <li><i><b>14X better than the S&amp;P 500</b></i></li>\n</ul>\n<p>Alibaba March 2027 Consensus Return Potential</p>\n<p><img src=\"https://static.tigerbbs.com/ad665b05d566bc36268bf51f43f642a8\" tg-width=\"640\" tg-height=\"395\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: F.A.S.T. Graphs, FactSet Research) - actual consensus EPS estimates through 2026</i></p>\n<p>If BABA grows as analysts expect through March 2027, and returns to historical fair value, then you could expect</p>\n<ul>\n <li>324% total returns, more than quadrupling your investment</li>\n <li>26.8% CAGR returns</li>\n <li>vs. 6.5% CAGR S&amp;P 500</li>\n</ul>\n<p>Over the very long term, here's what analysts expect.</p>\n<ul>\n <li>0% yield + 26.0% CAGR growth = 26.0% CAGR total returns (16% to 32% CAGR range)</li>\n <li>vs. 8.0% CAGR S&amp;P 500 and 9.1% CAGR dividend aristocrats</li>\n</ul>\n<p>Reason 5: Total Return Potential That Could Turn Thousands Into Tens Of Millions Over Decades</p>\n<p>What does potential hyper-growth sustained over many years and decades look like? Generation wealth, that can not just fund your rich retirement, but that of your children and grandchildren as well.</p>\n<p>Alibaba 30-Year Monte Carlo Simulation, Statistical Inflation+ Tax Adjusted Total Return Forecast</p>\n<p><img src=\"https://static.tigerbbs.com/fdf77d6747dcbef9c96c2442919fb370\" tg-width=\"640\" tg-height=\"201\" referrerpolicy=\"no-referrer\"><img src=\"https://static.tigerbbs.com/4e592eb0d96f33779a576b8fee99193a\" tg-width=\"640\" tg-height=\"294\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/d7a3bf90aac22084eea55216a46577c1\" tg-width=\"640\" tg-height=\"282\" referrerpolicy=\"no-referrer\"></p>\n<blockquote>\n <i>Monte Carlo simulation results for 5000 portfolios with $1,000 initial portfolio balance using available statistical model data from Jan 2015 to Dec 2020.Returns were modeled as correlated random samples from a multivariate normal distribution.The historical pre-tax return for the selected portfolio for this period was 21.09% mean return (14.38% CAGR) with a 36.62% standard deviation of annual returns.The simulated asset returns were adjusted based on provided tax assumptions.The simulated inflation model used historical inflation with a 1.75% mean and 0.94% standard deviation based on the Consumer Price Index (CPI-U) data from Jan 2015 to Dec 2020.The generated inflation samples were correlated with simulated asset returns based on historical correlations.The available historical data for the simulation inputs was constrained by Alibaba Group Holding Limited (BABA) [Oct 2014 - Feb 2021]. (Source: Portfolio Visualizer)</i>\n</blockquote>\n<p>BABA's historical returns are depressed because it's currently in a bear market. Yet even if it delivers historical returns over the next 30 years, the standard retirement time frame there is an 80% statistical probability that</p>\n<ul>\n <li>$1,000 invested today becomes $6,500 to $324,000</li>\n <li>adjusted-for inflation and taxes</li>\n <li>assuming top tax bracket, including for my home state of MN</li>\n</ul>\n<p>What if BABA is able to sustain approximately 15% CAGR growth for longer than 30 years? Then a modest investment today could transform into generation wealth.</p>\n<p>Alibaba 75-Year Monte Carlo Simulation, Statistical Inflation+ Tax Adjusted Total Return Forecast</p>\n<p><img src=\"https://static.tigerbbs.com/130bb2a9ff8bb6a1de235ce4fda182f6\" tg-width=\"640\" tg-height=\"203\" referrerpolicy=\"no-referrer\"><img src=\"https://static.tigerbbs.com/7a1be76959eaedd5e25ed17b15702546\" tg-width=\"640\" tg-height=\"291\" referrerpolicy=\"no-referrer\"><i>(Source: Portfolio Visualizer)</i></p>\n<ul>\n <li>with a $75,000 total investment, made at the best valuations in five years, there is a very good statistical chance that I will eventually become an Alibaba millionaire</li>\n <li>there is a decent chance that my children and grandchildren will be Alibaba billionaires</li>\n</ul>\n<p>Reason 6: One Of The Most Reasonable And Prudent Growth Stocks You Can Buy Today</p>\n<p>I never recommend a company, much less put my own money at risk, without first knowing exactly how prudent a potential investment it is relative to the S&amp;P 500, most people's default alternative.</p>\n<p><img src=\"https://static.tigerbbs.com/28d872260c41f72ddc16460a3024e8bf\" tg-width=\"640\" tg-height=\"197\" referrerpolicy=\"no-referrer\"></p>\n<p>The investment decision score is based on valuation and the three core principles of all successful long-term investors.</p>\n<img src=\"https://static.tigerbbs.com/25b7070d1af7586faee7c2814d82bb5c\" tg-width=\"552\" tg-height=\"774\">\n<table>\n <tbody>\n  <tr></tr>\n  <tr></tr>\n </tbody>\n</table>\n<p><i>(Source:Dividend Kings Automated Investment Decision Tool)</i></p>\n<p>BABA is one of the most reasonable and prudent hyper-growth stocks you can buy today. It offers</p>\n<ul>\n <li>objectively superior quality to the average S&amp;P 500 company (credit ratings and ROC)</li>\n <li>much faster growth (3 to 4X faster)</li>\n <li>much superior valuation (mirror image of the S&amp;P 500)</li>\n <li><b>6X the 5-year risk-adjusted expected returns</b></li>\n</ul>\n<p>That's assuming you're</p>\n<ul>\n <li>comfortable with the risk profile (see dive section)</li>\n <li>own it within a diversified and prudently risk-managed portfolio</li>\n</ul>\n<p>Alibaba Risk Profile: Why BABA Isn't Right For Everyone<img src=\"https://static.tigerbbs.com/e3b51aa88280a43b2551902a5ae635ef\" tg-width=\"640\" tg-height=\"223\" referrerpolicy=\"no-referrer\">Fundamental Risk Summary</p>\n<blockquote>\n In our view, the most pressing risks to the Alibaba investment thesis are a sustained slowdown in Chinese consumption patterns, e-commerce competition, increased regulatory scrutiny, and the possibility that ancillary businesses divert management's attention and reduce profitability.China's e-commerce landscape has become increasingly competitive, with Pinduoduo registering faster GMV and user growth than Alibaba with the support of Tencent's traffic and its group-buying traffic generation method, and JD.com positioning itself as a credible rival through its fulfillment capability, quality assurance, and its partnerships with Tencent. These platforms do not yet have Alibaba's scale in China, but they specialize in specific products or services, or markets, which might impede Alibaba's growth.Alibaba is also subject to increased online and mobile payment regulation. Financial regulators in China have continuously scrutinized online and mobile payment services. Alibaba has persistently faced the issue of counterfeit and infringing goods on its marketplaces. Hangzhou government's assigning of representatives to work inside Alibaba also raise concerns of some investors, although there is no evidence of consequence of value destruction for Alibaba.Expansion into peripheral businesses might distract management, reduce profitability without materially improve Alibaba's ecosystem. While we're optimistic about Alibaba's ability to become a preferred partner for international retailers and consumer brands looking to sell in China, the firm does not enjoy the same network effect and brand recognition in other countries, and it may face challenges directly expanding in these markets...Like many other Chinese Internet companies listed in overseas markets, Alibaba operates under a\n <b>variable interest entity, or VIE, structure</b>designed to let companies bypass Chinese legal restrictions on foreign ownership in certain sectors.Alibaba's foreign investors will essentially hold shares of Alibaba's VIE domiciled in the Cayman Islands. We don't expect any legal challenges to VIE structures by the Chinese government in the future. However, if the legitimacy of Alibaba's related VIE is found to violate applicable law or regulation, Chinese regulatory authorities might take action against the VIE, including revoking the business and operating licenses of Alibaba's subsidiaries or the VIE, or discontinuing, restricting, or restructuring Alibaba's operations. Since the Chinese Ministry of Commerce has the jurisdiction to regulate VIEs, we believe overseas investors would have limited legal rights...Despite\n <b>management's proven execution capabilities</b>,\n <b>we have concerns regarding Alibaba's corporate governance</b>, which is reflected in our Poor equity stewardship rating.In our view,\n <b>Alibaba is led by a capable and ambitious management team</b>. Founder and former executive chairman Jack Ma has been the keeper of the flame since the company's founding in 1999. Under his leadership, Alibaba has become China's leading e-commerce player, accounting for the majority of transaction volume for China's online shopping industry.Over the past decade, Taobao has transformed the shopping behaviors of millions of Chinese consumers. We believe management has also done a commendable job developing and preserving Alibaba's wide economic moat by building several other leading online marketplaces and platforms such a Tmall, Juhuasuan, Alibaba.com, AliExpress, Alipay, AliCloud, and Ele.me. Although the company faces a potentially uneven long-term economic backdrop and new sources of competition in China,\n <b>we remain confident that Alibaba can sustain its wide economic moat over the long term under its existing leadership.</b>Ma's decision to step away from Alibaba's executive chairman role in 2019 and the company's board of directors will not affect our positive long-term bias for two reasons. First,\n <b>we believe recent results demonstrate that Alibaba has a deep management bench</b>,\n <b>including current CEO Daniel Zhang</b>(who was appointed CEO of Alibaba Group in May 2015, will assume the chairman role in 2019, and played a central role in the development of the Singles Day shopping event, building the Tmall platform from a regional to global business-to-consumer platform, and deploying several of Alibaba's \"New Retail\" strategies) and executive vice chairman Joe Tsai. Second, we believe Ma's involvement with the Alibaba Partnership--a group of core company managers--will allow him to stay involved with key strategic decisions...We harbor concerns about Alibaba's partnership structure, which might jeopardize the board's independence.The partnership is led by a committee of five, including Ma, executive vice chairman Joe Tsai, and CEO Daniel Zhang. The Alibaba Partnership has the exclusive right to nominate or appoint up to a simple majority of the members of its board of directors.Any board candidate it nominates is presented to shareholders for voting. If the candidate is not elected by shareholders, the partnership can appoint another candidate without a vote. That candidate will serve as an interim director until the next annual general meeting, where either the same candidate or yet another nominee proposed by Alibaba partners will stand for election.The current board of directors is composed of 11 directors, five of which are Alibaba Partnership nominees. Alibaba Partnership can also nominate or appoint two additional directors to the board, which would increase the number of directors to 13, and the Partnership will get majority control of the board.\n <b>The Partnership essentially controls the board and limits the influence of outside shareholders</b>.\" - Morningstar (emphasis added)\n</blockquote>\n<p>MSCI, Reuters and Morningstar, as well as S&amp;P, Fitch, and Moody's have concerns about BABA's corporate governance, which is factored into each company's respective rating on BABA's credit and material ESG risk (more on that later).</p>\n<ul>\n <li>all Chinese companies are speculative</li>\n <li>thus requiring a 5% higher margin of safety to be a potentially good buy (20% in the case of BABA)</li>\n <li>investors not comfortable with BABA's complex risk profile should not own it</li>\n <li>no company is right for everyone</li>\n</ul>\n<p>Alibaba ESG Risk Analysis: An Important Component Of A Company's Overall Financial Risk Profile (But Especially For Chinese Tech Companies)</p>\n<ul>\n <li>critically important to anyone concerned about corporate governance and potential accounting fraud</li>\n</ul>\n<p>In today's hyperpolarized political climate, some investors consider ESG to be political/personal ethics/opinion-driven nonsense.</p>\n<p>ESG as measured by institutions is NOT simply the concern of \"woke\" and \"on-trend\" hippy millennials trying to virtue signal to impress Silicon Valley venture capitalists or social media followers.</p>\n<blockquote>\n Companies with strong ESG profiles may be better positioned for future challenges and experience fewer instances of bribery, corruption, and fraud.\" - MSCI\n</blockquote>\n<p>According to the world's best risk-assessors, ESG metrics are a critical component of a company's overall risk profile. Here's who considers ESG important and builds it into their safety models and ratings.</p>\n<ul>\n <li>BlackRock - #1 asset manager in the world</li>\n <li>MSCI - #1 indexing giant</li>\n <li>Morningstar</li>\n <li>Reuters/Refinitiv</li>\n <li>ISS (Institutional Shareholder Services) - #1 corporate proxy firm on earth</li>\n <li>S&amp;P</li>\n <li>Fitch</li>\n <li>Moody's</li>\n <li>DBRS (Canadian credit rating agency)</li>\n <li>AMBest (insurance industry rating agency)</li>\n</ul>\n<p>The reason some investors consider ESG to be political is that some investors consider some industries to be inherently \"evil\" such as tobacco, energy, big tech, pharma, health insurers, fast-food, snack foods, and defense contractors.</p>\n<ul>\n <li>such opinions are personal and based on individual ethics</li>\n <li><b>ESG scores as calculated by institutions are quantitatively based and focused on only fundamental financial risks to the underlying business</b></li>\n <li>they are compared against industry peers and as objective as can be realistically expected</li>\n</ul>\n<p>Personal ethical or political opinions are not what rating agencies or asset managers care about.</p>\n<p>MSCI rates over 2,800 global companies on 37 ESG metrics, using a quantitative and qualitative approach, just as all the rating agencies do, and Ben Graham recommended.</p>\n<blockquote>\n Our global team of 185 experienced research analysts assesses thousands of data points across 37 ESG Key Issues, focusing on the intersection between a company's core business and the industry issues that can create significant risks and opportunities for the company. Companies are rated on an AAA-CCC scale\n <b>relative to the standards and performance of their industry peers</b>...\n</blockquote>\n<p><img src=\"https://static.tigerbbs.com/298cf61010c39363fd5dc1b3438f0774\" tg-width=\"640\" tg-height=\"570\" referrerpolicy=\"no-referrer\"></p>\n<blockquote>\n The MSCI ESG rating model seeks to answer four key questions about companies:• What are the most significant ESG risks and opportunities facing a company and its industry?• How exposed is the company to those key risks and/or opportunities?• How well is the company managing key risks and opportunities?• What is the overall picture for the company and how does it compare to its global industry peers?\" - MSCI\n</blockquote>\n<p><img src=\"https://static.tigerbbs.com/af3bf10cdfd7ab0fe07e7c636b3eded9\" tg-width=\"640\" tg-height=\"551\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: MSCI)</i></p>\n<p><b>The ESG scores you find from the best risk-assessors in the world are not opinions based on political correctness.They use a quantitative approach to fundamental company risk analysis.</b>One based on decades of historical data pertaining to minimizing the risk of fundamental deterioration, bankruptcy, and stock/bond investors getting wiped out.</p>\n<ul>\n <li>ESG risk ratings + trends make up about 20% of the overall DK quality score for most companies that have an ESG rating from MSCI, Morningstar/Sustainalytics, and Reuters/Refinitiv</li>\n</ul>\n<p><img src=\"https://static.tigerbbs.com/918fd6ab7c2e2163bd8d547d050d75d6\" tg-width=\"640\" tg-height=\"512\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/8a8bd15a9cc3aea38257b3c9645d424f\" tg-width=\"640\" tg-height=\"220\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: MSCI)</i></p>\n<ul>\n <li>based on the 12 material sustainability factors MSCI's 185 industry experts believe is important to financial risk for midstream companies, BABA scores are in the bottom 37% of its peers (below average)</li>\n <li>that score is has been improving over the last four years</li>\n <li>though it dipped one level in the 2020 annual update</li>\n</ul>\n<p>How Morningstar/Sustainalytics Assesses Long-Term ESG Financial Risk</p>\n<ul>\n <li>Morningstar/Sustainalytics cares about material ESG variables that are historically correlated to a company's enterprise value (market cap + net debt)</li>\n <li>Financial risk NOT political/personal ethical opinions are what Morningstar assesses</li>\n <li>20 fundamental metrics analyzed, compared to industry peers</li>\n <li>100 point risk scale</li>\n <li>lower is better</li>\n</ul>\n<p><img src=\"https://static.tigerbbs.com/6235ae87804a6aa4155b7553cf0470ef\" tg-width=\"640\" tg-height=\"406\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/22bc0cb2ca3614062e1aaabda81de4f0\" tg-width=\"640\" tg-height=\"370\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/2b225070612fbf42d76647657fd9c799\" tg-width=\"640\" tg-height=\"420\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/a2d7fbe67e46b7732bad777d103ec779\" tg-width=\"640\" tg-height=\"286\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/4e030c1a04fb5a8ba813bcf1831db84b\" tg-width=\"640\" tg-height=\"471\" referrerpolicy=\"no-referrer\"></p>\n<p>Every controversy surrounding BABA is factored into Morningstar ESG risk rating. That includes the controversies around anti-trust practices for which it's now under investigation by Chinese regulators.</p>\n<ul>\n <li>Morningstar considers this to be a medium ESG risk industry</li>\n <li>and management is doing an average job of managing that risk</li>\n <li>Morningstar scores BABA 26.2 \"medium risk\" in the bottom 25% of tech companies and in the top 43% of all 13,645 companies Morningstar rates</li>\n <li>risk rating increased from 24.6 to 26.2 in the past year due to increasing regulatory concerns</li>\n</ul>\n<p>Reuters/Refinitiv also provides ESG financial risk ratings.</p>\n<ul>\n <li>over 150 industry experts covering over 7,000 global companies</li>\n <li>based on 400+ fundamental metrics</li>\n <li>and 178 materially important financial ESG risk factors</li>\n</ul>\n<p><img src=\"https://static.tigerbbs.com/7da4560ef863e32a307af7f3a93b28d1\" tg-width=\"640\" tg-height=\"426\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/078e47b8a22efff637d578f67d1bdbbf\" tg-width=\"640\" tg-height=\"308\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/26ac2395f9786b77c8f795cd0c659d9a\" tg-width=\"640\" tg-height=\"847\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: Refinitiv)</i></p>\n<p><img src=\"https://static.tigerbbs.com/2c212bc0cfadad173dc51c91fbee9438\" tg-width=\"640\" tg-height=\"435\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: Interactive Brokers)</i></p>\n<ul>\n <li>Reuters ranks BABA as in the bottom 30% of its peers on actual financial ESG risk</li>\n <li>in the top 40% in terms of environmental issues</li>\n <li>bottom 30% for social</li>\n <li>bottom 20% for corporate governance</li>\n <li>and near the very bottom of its industry on controversies</li>\n <li>for a combined score that's in the bottom 10% of its peers</li>\n <li>which is why BABA's dependability score fell from 75% to 68% and resulted in a downgrade from 11/12 to 10/12 speculative quality (about two months ago)</li>\n <li>and why I'm looking to invest a maximum of $100K into BABA vs. $1 million into far lower risk Amazon</li>\n <li>risks with BABA are far higher than with AMZN</li>\n</ul>\n<p>When no less than 10 of the world's most reputable risk assessors say something is important to long-term financial risk for a company you can be sure that Dividend Kings will include it in our 61 metric safety model and 126 point quality score (converted to a 100% scale).</p>\n<ul>\n <li>there is no such thing as a \"risk-free\" company</li>\n <li>factoring in all material financial risks is how you determine whether a company is appropriate for your needs</li>\n <li>and how we determine the margin of safety required to compensate us for that risk and thus determine potentially good buy prices or better</li>\n <li>no average investor can ever be a true expert on a company</li>\n <li>but DK knows where to find the most reliable expert data to create a comprehensive safety, dependability, and quality score that includes every major risk factor a company has</li>\n</ul>\n<p>No less than Ben Graham, the father of securities analysis considered qualitative factors critical to making prudent long-term investing decisions.</p>\n<blockquote>\n <i>... a satisfactory statistical exhibition is a necessary though by no means a sufficient condition for a favorable decision by the analyst.\"</i>-Benjamin Graham, Security Analysis (1951 ed.), Page 76\n</blockquote>\n<p>In other words, Graham considered a combination of quantitative and qualitative analysis, looking at the past, present, and likely future, to be the optimal strategy for making sound long-term investments.</p>\n<ul>\n <li>Dividend Kings uses risk ratings from eight of the world's most reputable agencies</li>\n <li>if fundamentals weaken our model will know it and our scores, ratings, and recommendations will change accordingly</li>\n</ul>\n<p>Bottom Line: Alibaba Is Set To Soar And Too Cheap To Ignore</p>\n<p>I can't tell you what any stock will do over the next few weeks, months or even a year or two.</p>\n<ul>\n <li>according to JPMorgan Asset Management, 92% of 12-month returns are a function of luck</li>\n <li>over 10+ years 90% to 91% of returns are a function of fundamentals</li>\n <li>over the long-term fundamentals are 11X as powerful as luck</li>\n</ul>\n<p>Alibaba represented one of the most undervalued hyper-growth tech blue-chips before this interest rate pullback in tech began.</p>\n<p>Alibaba's recent decline has been sharper than many peers, which isn't justified by its recent earnings results, or overall fundamentals.</p>\n<p>The long-term growth outlook has gotten better, not worse.</p>\n<p>While BABA will always be an inherently speculative company, for those comfortable with the risk profile, a 42% margin of safety more than compensate for the risks you're facing.</p>\n<p>In the coming years, BABA has the potential to deliver Buffett-like returns that are almost 6X the risk-adjusted returns of the S&amp;P 500.</p>\n<p>Eventually, the cash pile will grow so large, the company will be forced to start buying back stocks and paying dividends.</p>\n<p>A modest investment in BABA today could fund a comfortable or even lavish retirement purely from future dividends in a few decades.</p>\n<p>Prudent long-term investors know that through a disciplined application of financial science we never have to pray for luck. We make our own luck over time.</p>\n<p>When it comes to Alibaba, as close to a perfect hyper-growth blue-chip investment as exists on Wall Street today, the time to make our own luck is now.</p>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>6 Reasons Alibaba Is Set To Soar And Too Cheap To Ignore</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\n6 Reasons Alibaba Is Set To Soar And Too Cheap To Ignore\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-03-02 20:17 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4410621-six-reasons-alibaba-is-too-cheap-to-ignore><strong>Seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nRising interest rates have caused a modest dip in stocks, and a pullback in tech stocks. Some individual companies have fallen into bear markets.\nAlibaba represents one of the highest quality...</p>\n\n<a href=\"https://seekingalpha.com/article/4410621-six-reasons-alibaba-is-too-cheap-to-ignore\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"BABA":"阿里巴巴","09988":"阿里巴巴-W"},"source_url":"https://seekingalpha.com/article/4410621-six-reasons-alibaba-is-too-cheap-to-ignore","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1169004570","content_text":"Summary\n\nRising interest rates have caused a modest dip in stocks, and a pullback in tech stocks. Some individual companies have fallen into bear markets.\nAlibaba represents one of the highest quality (though speculative) hyper-growth blue-chips you can buy today. It began the tech pullback highly undervalued and is now 42% undervalued.\nPost earnings, when management updated analysts on regulatory risks, the LT growth consensus from all 59 analysts went up from 22.3% to 26.0% CAGR. The growth outlook has improved.\nYet BABA is now trading at some of the lowest valuations in its history, resulting in 27% CAGR consensus return potential through 2027, and 6X the risk-adjusted expected returns of the S&P 500 for the next five years.\nThanks to the potential to become one of the best dividend growth blue-chips of tomorrow, I've invested almost $50,000 into BABA, and am willing to invest up to $100K if it keeps falling in the short term. For those comfortable with the complex risk profile of this company, and who use proper diversification and prudent risk management, BABA represents a potentially life-changing and rich retirement dream-making long-term investment opportunity.\nThis idea was discussed in more depth with members of my private investing community, The Dividend Kings.Get started today »\n\nIt's been a volatile few weeks for stocks, but tech stocks in particular.\nWhile the S&P 500 is just barely off its recent all-time highs, the Nasdaq has fallen 6%. And of course, it's a market of stocks, not a stock market. Individual tech stocks are in corrections or even bear markets.\n\ntech stocks in general, are now in a pullback\ninduced by rising rate concerns\n\nWhy Rising Rates Are NOT A Concern For Prudent Long-Term Investors\nIn the modern era, primarily the last 25 years, all stocks have done well in rising long-term rate environments.\n(Source: Ben Carlson)\n\ngrowth, value, small, large, didn't matter, stocks went up as rates rose\n\n\nA study from JPMorgan(NYSE:JPM)found that from 1963 through 2019 stocks generally went up as long as 10-year yields were under 5%.\nGoldman Sachs'(NYSE:GS)head of quantitative research finds that the rate of interest rate is more important than the actual rate itself\n37+ basis points per month is the tipping point strongly correlated with short-term corrections\nin the last month, 10-year yields are up 39 basis points\na level that is historically correlated with mild and short market declines\nin other words, this stock market dip is 100% normal and expected by prudent investors who understand market history\n\nEven so-called \"bond alternatives,\" such as REITs, are not hurt by rising long-term rates.\n\nFrom 1972 to 2018 the % of REIT total returns explained by 10-year yields was just 2%\nhad you been able to predict interest rates with perfect precision, you couldn't have predicted actual REIT returns\n\nPrudent long-term investors know that you don't actually have to predict interest rates to be successful.\n\nlong-term interest rates are just one of many factors that determine company success over time\nand have a relatively small impact on fundamental growth rates\nbond prices are 100% a function of credit quality and LT interest rates\nstock prices are 91% a function (over the long-term) of fundamentals and valuations\nother than generating income, stocks and bonds are different asset classes that are nothing alike\nno stock is EVER a true \"Bond alternative\" because of this fundamental fact\n\n\n\nIf you focus on the trinity of yield + growth + valuation you are optimizing the fundamentals that drive 91% of long-term stock returns.\n\ncombining the 3 core fundamentals of long-term total returns with prudent risk management = practicing disciplined financial science\n\nMy Personal Phoenix Retirement Portfolio Fundamentals (75% Dividend Stocks/25% Growth Stocks)\n\naverage quality: 10.7/12 SWAN vs. 10.9 average aristocrat\naverage safety score: 4.8/5 very safe vs. 4.7 average aristocrat\naverage credit rating: A- stable vs. A- stable average aristocrat (2.5% 30-year bankruptcy risk)\nthe yield on cost: 3.8%\ncurrent yield: 3.3% vs. 1.6% S&P, 2.1%dividend aristocrats (our equity benchmark) and1.8% a 60/40 stock/bond portfolio\nMorningstar long-term growth forecast: 16.2% CAGRvs. 6.4% S&P 500 & 7.0% dividend aristocrats\nDividend growth forecast: 7.0% CAGR= almost 4X the rate of inflation, double every decade (every 15-years in inflation-adjusted dollars)\nweighted average forward PE: 16.6 vs. 18.9 historical norm vs. 21.9 S&P 500\naverage discount to fair value (Morningstar estimate): 12%vs. -32% S&P 500 and -13% aristocrats\n5-year analyst consensus total return potential: 3.3% yield + 16.2% CAGR long-term growth +2.6% CAGR valuation boost =22.1%CAGRvs. 6.5% S&P 500\nRisk-Adjusted Expected Return: 16.2% CAGRvs. 4.0% CAGR S&P 500 (4.0X market's expected return)\nLT Consensus Total Return Potential:3.3% yield on cost + 16.2% growth =19.5% CAGRvs. 8.0% S&P 500 and 9.1% dividend aristocrats\n\nHow does a double the market's yield and LT growth consensus sound?\nHow about the potential to quadruple the S&P 500's returns over the next five years and more than double the market's long-term consensus return potential?\nYou can't find that in any index fund, you have to build yourself. That's what DK Phoenix has been doing for almost a year, via a combination of opportunistic limit buying and dollar-cost averaging.\n\nI've invested about $500,000 of my life savings into the DK Phoenix strategy\nI'm definitely eating my own cooking\n\nThe results so far have been spectacular. 40% gains from a portfolio that started out 100% bonds and has been buying every single day, including during record highs and overvalued markets.\nMore importantly, this portfolio is generating an ocean of very safe, and steadily growing dividends.\n\nduring the Great Recession S&P 500 dividends down 25%\nthis portfolio's dividends were flat\n\nHowever, I want to point out how the potential combination of strong yield + fantastic growth potential and attractive valuations means this portfolio is potentially set up for returns on par with the greatest investors in history.\n\nBut not from some complex or risky asset you have to manage and tie up your money in for seven to 15 years (as with hedge funds), but a 100% liquid world-class blue-chip investment.\n\nblue-chip dividend investing at its finest\nhigh-probability/low risk buys that are 91% likely to meet our goals over the long-term\n\nNote that this portfolio is 25% growth stocks, though every growth company is one I expect to eventually pay a dividend.\nWhether it takes 5 or 50 years doesn't matter to me, because I have 75% of my portfolio generating over $20,000 per year in very safe income that rises in any economic or market condition.\nWhy I'm Backing Up The Truck On Alibaba In This Tech Pullback\nMy personal Phoenix retirement portfolio is what tracks every Dividend Kings Daily Blue-Chip Deal Video Recommendation.\n\n\nI've bought Alibaba (BABA) 87 times since April 2020\ninvesting a total of about $47,000\nabout 6.9% of my personal Phoenix portfolio (100 companies)\nmy personal risk cap on BABA is $100,000 for the next 20 years, 10X less than what I plan to invest in Amazon(NASDAQ:AMZN)\nmy goal is to invest $1 million into Amazon in my lifetime, as fast as I can\nbut still a potentially life-changing and rich retirement making investment (see reason five)\n\nWhy am I willing to put up to $100,000 of my hard-earned savings to work in this speculative hyper-growth blue-chip?\nFor the same 6 reasons that BABA at today's outrageously attractive valuation might be just what your diversified and prudently risk-managed portfolio needs.\nReason 1: An Extremely High-Quality Company\nThe Dividend Kings motto is \"Quality first and prudent valuation and sound risk management always.\"\nAlibaba Overall Quality: 80% = 10/12 Speculative SWAN\n\n\n\nBABA\nFinal Score\nRating\n\n\nBalance Sheet Safety\n88%\n5/5 Very Safe\n\n\nBusiness Model\n90%\n3/3 Wide and Stable Moat\n\n\nDependability\n68%\n2/4 Above-Average Dependability\n\n\nTotal\n80%\n10 (SWAN) - Speculative\n\n\n\n(Source:Dividend Kings Safety & Quality Tool) updated at the start and end of each day\n\nunchanged from last quarter\n\nDK overall quality scores factor in about 100 fundamental metrics covering\n\ndividend safety\nbalance sheet strength\nshort and long-term bankruptcy risk\naccounting and corporate fraud\nprofitability and business model\nlong-term sustainability\nmanagement quality\ndividend friendly corporate culture/income dependability\n\nAlibaba Is the 136th Highest Quality Master List Company (Out of 490)\n\n(Source: DK Safety & Quality Tool) updated at the end of each day, sorted by overall quality score\nThe DK Master List includes every dividend aristocrat, king, champion, and 12/12 Ultra SWAN quality company. Among the highest quality companies on earth, BABA ranks 136th.\nAlibaba's 80% quality score means its similar in quality to such 10/12 SWANs, 11/12 Super SWANs, and 12/12 Ultra SWANs as\n\nGeneral Dynamics (GD): non-speculative dividend aristocrat\nsalesforce.com (CRM): non - speculative hyper-growth\nRoyal Bank of Canada (RY): non - speculative\nUnitedHealth Group (UNH): non - speculative\nFacebook (FB): non - speculative hyper-growth\nCisco (CSCO): non - speculative\nMagellan Midstream Partners (MMP) - non-speculative\nLockheed Martin (LMT) - non -speculative\nTexas Instruments (TXN) - non-speculative\nBritish American Tobacco (BTI) - non-speculative\n\nAll told, our quality score includes 137 fundamental metrics pertaining to dividend safety, long-term dependability, and total returns. Every metric was selected based on\n\ndecades of empirical data\nthe experience of the greatest investors in history\neight rating agencies\nand what blue-chip economists and analyst firms consider most closely correlated to a company's long-term success.\n\nOur goal is to ensure we see fundamental deterioration coming before dividends get cut and a company, in a worst-case scenario, goes bankrupt.\n\neven dividend aristocrats can fail (just ask GE or CTL investors)\neven dividend aristocrats can go bankrupt (just ask Kmart or Winn-Dixie investors)\n\nThere are no sacred cows in the Dividend Kings universe. Where the fundamentals lead we always follow.\n\nthe essence of financial science\n\nReason 2: Remarkable Long-Term Growth Potential\n\n(Source: FactSet Research Terminal)\n\naccording to FactSet the median LT growth consensus from all 59 analysts that cover BABA is 26.0% CAGR\ncollectively these 59 experts know BABA better than anyone other than management\npre-earnings growth consensus was 22.3%\n\n\n\nYCharts LT growth consensus is less bullish but still showing 20% hyper-growth\n\n\n(Source: FAST Graphs, FactSet Research)\n\n5 analyst median FAST Graphs consensus is 25.3% CAGR LT growth\n\nAlibaba Medium-Term Growth Consensus\n\n\n\nMetric\nFiscal 2021 Consensus\n2022 consensus growth\n2023 consensus growth\n2024 consensus growth\n2025 consensus growth\n2026 consensus growth\n\n\nEPS\n39%\n15%\n24%\n23%\n20%\n16%\n\n\nOwner Earnings (Buffett smoothed out FCF)\n-3%\n162%\nNA\nNA\nNA\nNA\n\n\nOperating Cash Flow\n45%\n11%\n18%\n29%\nNA\nNA\n\n\nFree cash flow\n52%\n-1%\n25%\n24%\nNA\nNA\n\n\nEBITDA\n58%\n24%\n23%\nNA\nNA\nNA\n\n\nEBIT (operating profit)\n29%\n40%\n30%\nNA\nNA\nNA\n\n\n\n(Source: FAST Graphs, FactSet Research Terminal)\n20% to 26% CAGR LT growth consensus is one of the fastest of any company on earth, much less a $650 billion behemoth like BABA.\nWhere is BABA's remarkable growth expected to come from?\n\n(Source: earnings presentation)\n\nAlibaba has almost 1 billion users\nand is one of the fastest-growing cloud computing companies on earth\n#1 in cloud computing in China\n\n\n(Source: earnings presentation)\n\nAlibaba is the Amazon/Alphabet/Facebook/PayPal/Microsoft of China\nit's basically a superior quality Chinese Nasdaq index\njust as Amazon is a superior quality alternative to the US Nasdaq\nexcept that BABA has even more optionality than Amazon courtesy of several\"Super Apps\"of which the US has no equivalent\nSuper Apps are basically all the apps you use on a daily basis in one, and in China, they dominate the lives of almost 1.5 billion people\necosystems of steroids, and the ultimate wide-moat businesses\nthe only effective limitation is government regulations (more on this in the risk profile)\n\n\n(Source: FactSet Research Terminal)\n\n27% annualized revenue growth through 2026\nvs. 19% for Amazon\n34% CAGR cloud computing revenue growth\ncore Chinese commerce sales growth 28% CAGR\n\nWith almost 1.5 billion Chinese consumers to tap into, Alibaba's growth runway is very long.\n\nits optionality is among the best of any company on earth\npotentially superior to even Amazon's\n\nAlibaba Consensus Profitability Forecast\n\n\n\nYear\nSales\nFCF\nEBITDA\nEBIT\nNet Income\n\n\n2020\n$71,376\n$18,634.0\n$22,077.0\n$12,803.0\n$20,902.0\n\n\n2021\n$109,049.0\n$30,666.0\n$32,294.0\n$18,332.0\n$26,210.0\n\n\n2022\n$142,453.0\n$33,923.0\n$40,043.0\n$24,985.0\n$27,169.0\n\n\n2023\n$172,942.0\n$39,671.0\n$49,694.0\n$33,156.0\n$34,068.0\n\n\n2024\n$215,267.0\n$45,789.0\n$59,475.0\n$43,961.0\n$43,031.0\n\n\n2025\n$264,808.0\nNA\n$72,896.0\n$57,133.0\n$54,736.0\n\n\n2026\n$296,476.0\nNA\n$95,192.0\n$70,453.0\n$63,654.0\n\n\n\n\n\n\nYear\nFCF Margin\nEBITDA Margin\nEBIT Margin\nNet Margin\n\n\n2020\n26.1%\n30.9%\n17.9%\n29.3%\n\n\n2021\n28.1%\n29.6%\n16.8%\n24.0%\n\n\n2022\n23.8%\n28.1%\n17.5%\n19.1%\n\n\n2023\n22.9%\n28.7%\n19.2%\n19.7%\n\n\n2024\n21.3%\n27.6%\n20.4%\n20.0%\n\n\n2025\nNA\n27.5%\n21.6%\n20.7%\n\n\n2026\nNA\n32.1%\n23.8%\n21.5%\n\n\n\n(Source: FactSet Research Terminal)\n\nAlibaba is still relatively early in its growth cycle\ninvesting very heavily into R&D and growth capex: $12.6 billion in 2020\n$37.2 billion growth spending consensus in 2026\nyet analysts expect already impressive profitability to remain relatively stable during the next five years\n\nAlibaba Consensus Potential Future Dividend Forecast\n\n\n\nYear\nFCF/Share Consensus\nDividend Per Share (50% Payout Ratio)\nYield On Today's Cost\nConsensus Yield Potential\n2026 Consensus Price\n\n\n2020\n$6.98\n$3.49\n1.47%\nNA\nNA\n\n\n2021\n$8.95\n$4.48\n1.88%\n1.39%\n$323.00\n\n\n2022\n$10.70\n$5.35\n2.25%\n1.41%\n$379.00\n\n\n2023\n$13.84\n$6.92\n2.91%\n1.48%\n$466.00\n\n\n\n(Source: FactSet Research Terminal)\n\nif Alibaba were to start paying 50% of its FCF as dividends then by 2023 that would equal a yield on cost of almost 3% and 1.5% consensus yield\n\nWhy do I expect BABA to eventually start paying dividends?\nAlibaba Consensus Balance Sheet Forecast\n\n(Source: FactSet Research Terminal)\n\ndespite spending $37 billion to fund growth in 2026, analysts expect BABA to end fiscal 2026 with $275 billion in cash and $260 billion in net cash\nmore than Apple(NASDAQ:AAPL)had when it started buying back stock and paying dividends\n\nWhat's more, by 2024 alone analysts expect BABA's annual free cash flow to reach $46 billion.\n\n(Source: FactSet Research Terminal)\n\nif FCF grows at the 26% LT EPS growth consensus rate then by 2026 $73 billion in annual free cash flow\n\nThe bottom line on BABA is that it's the #1 global digital retailer but so much more. And it has the potential to make patient long-term investors extremely wealthy and eventually fund comfortable retirements from future dividends alone.\n\nwhat I call my \"Jack Ma retirement plan\"\n\nYet despite this incredible quality and growth potential, the market is mispricing BABA to a remarkable degree right now.\nReason 3: One Of Most Undervalued Tech Stocks In The World\n\n\n\nMetric\nHistorical Fair Value Multiples (all-years)\nFiscal 2021\nFiscal 2022\nFiscal 2023\n\n\nEarnings\n32.2\n$334\n$386\n$480\n\n\nOwner Earnings (Buffett smoothed out FCF)\n24.6\n$218\n$572\nNA\n\n\nOperating Cash Flow\n23.1\n$325\n$362\n$428\n\n\nFree Cash Flow\n30.7\n$338\n$336\n$421\n\n\nEBITDA\n33.2\n$389\n$485\n$597\n\n\nEBIT (operating income)\n45.1\n$298\n$416\n$541\n\n\nAverage\n$307\n$413\n$485\n\n\nCurrent Price\n$237.76\n\n\nDiscount To Fair Value\n23%\n42%\n51%\n\n\nUpside To Fair Value\n29%\n74%\n104%\n\n\nAnnualized Total Return Potential\nNA\n74%\n46%\n\n\n\n(Source: F.A.S.T. Graphs, FactSet Research)\nBABA is trading at a 42% discount to fiscal 2022 consensus fundamentals (which ends March 2022)\n\nA return to average historical fair value by the end of March 2023 would result in a 46% CAGR total return\n2021 fair value range: $336 to $572\n2021 Harmonic Average Fair Value (smooths out outliers): $413\n\nEven using the most conservative fair value of $336, BABA is still 29% undervalued and a potentially good speculative buy.\n(Source: FAST Graphs, FactSet Research)\n\non a blended PE basis, BABA is now tied for the lowest valuation in its history on the NYSE\nin other words, if you've ever wanted to buy BABA, now is the time\nvery likely to be near its eventual bottom\n\nI know that a lot of readers are now thinking \"sure, consensus estimates say BABA is a growth powerhouse, BUT what if analysts are wrong.\"\nThere is one thing we know for certain about all growth consensus estimates.\n\nthey are wrong\nthe question is how much\n\nAlibaba Analyst Scorecard\n\n\nDespite a highly complex business model analysts are relatively good at forecasting BABA's growth. Specifically, the company has only missed two-year earnings growth forecasts twice out of the six years that analysts have offered them.\n\nthe margin of error 20% to the upside and downside (modern era with lots of analyst coverage)\nlong-term growth consensus range: 20.0% to 26% CAGR\nlong-term growth consensus (from all 60 analysts ): 25.3% CAGR\nthe margin of error adjusted long-term growth consensus range: 16% to 32% CAGR\n\n\n(Source: F.A.S.T. Graphs, FactSet Research)\nThe current analyst consensus of 26.0% CAGR is similar to the growth rate of the last five years. The historical growth range since BABA came to the NYSE is 20% to 44% CAGR.\nThe secular growth catalysts represented by BABA's dominance in Chinese digital payments, banking, cloud computing, online retail, digital marketing, etc., means that I consider the analyst growth consensus range reasonable and achievable.\nStricter regulations are not expected to hamper BABA's growth significantly, according to the 60 analyst median consensus.\nReason 4: Total Return Potential That Could Make You Rich\n\nfor non-dividend stocks, total returns generated from growth and valuation mean reversion is the entire point for most investors\nBABA's consensus return potential is outstanding\n\nBABA 2023 Consensus Return Potential\n\n(Source: F.A.S.T. Graphs, FactSet Research)\nIf BABA grows as analysts expect through March 2023, and returns to historical fair value, then investors could expect\n\n102% total returns\n39.9% CAGR returns\nvs. 2.9% CAGR S&P 500\n14X better than the S&P 500\n\nAlibaba March 2027 Consensus Return Potential\n\n(Source: F.A.S.T. Graphs, FactSet Research) - actual consensus EPS estimates through 2026\nIf BABA grows as analysts expect through March 2027, and returns to historical fair value, then you could expect\n\n324% total returns, more than quadrupling your investment\n26.8% CAGR returns\nvs. 6.5% CAGR S&P 500\n\nOver the very long term, here's what analysts expect.\n\n0% yield + 26.0% CAGR growth = 26.0% CAGR total returns (16% to 32% CAGR range)\nvs. 8.0% CAGR S&P 500 and 9.1% CAGR dividend aristocrats\n\nReason 5: Total Return Potential That Could Turn Thousands Into Tens Of Millions Over Decades\nWhat does potential hyper-growth sustained over many years and decades look like? Generation wealth, that can not just fund your rich retirement, but that of your children and grandchildren as well.\nAlibaba 30-Year Monte Carlo Simulation, Statistical Inflation+ Tax Adjusted Total Return Forecast\n\n\n\nMonte Carlo simulation results for 5000 portfolios with $1,000 initial portfolio balance using available statistical model data from Jan 2015 to Dec 2020.Returns were modeled as correlated random samples from a multivariate normal distribution.The historical pre-tax return for the selected portfolio for this period was 21.09% mean return (14.38% CAGR) with a 36.62% standard deviation of annual returns.The simulated asset returns were adjusted based on provided tax assumptions.The simulated inflation model used historical inflation with a 1.75% mean and 0.94% standard deviation based on the Consumer Price Index (CPI-U) data from Jan 2015 to Dec 2020.The generated inflation samples were correlated with simulated asset returns based on historical correlations.The available historical data for the simulation inputs was constrained by Alibaba Group Holding Limited (BABA) [Oct 2014 - Feb 2021]. (Source: Portfolio Visualizer)\n\nBABA's historical returns are depressed because it's currently in a bear market. Yet even if it delivers historical returns over the next 30 years, the standard retirement time frame there is an 80% statistical probability that\n\n$1,000 invested today becomes $6,500 to $324,000\nadjusted-for inflation and taxes\nassuming top tax bracket, including for my home state of MN\n\nWhat if BABA is able to sustain approximately 15% CAGR growth for longer than 30 years? Then a modest investment today could transform into generation wealth.\nAlibaba 75-Year Monte Carlo Simulation, Statistical Inflation+ Tax Adjusted Total Return Forecast\n(Source: Portfolio Visualizer)\n\nwith a $75,000 total investment, made at the best valuations in five years, there is a very good statistical chance that I will eventually become an Alibaba millionaire\nthere is a decent chance that my children and grandchildren will be Alibaba billionaires\n\nReason 6: One Of The Most Reasonable And Prudent Growth Stocks You Can Buy Today\nI never recommend a company, much less put my own money at risk, without first knowing exactly how prudent a potential investment it is relative to the S&P 500, most people's default alternative.\n\nThe investment decision score is based on valuation and the three core principles of all successful long-term investors.\n\n\n\n\n\n\n\n(Source:Dividend Kings Automated Investment Decision Tool)\nBABA is one of the most reasonable and prudent hyper-growth stocks you can buy today. It offers\n\nobjectively superior quality to the average S&P 500 company (credit ratings and ROC)\nmuch faster growth (3 to 4X faster)\nmuch superior valuation (mirror image of the S&P 500)\n6X the 5-year risk-adjusted expected returns\n\nThat's assuming you're\n\ncomfortable with the risk profile (see dive section)\nown it within a diversified and prudently risk-managed portfolio\n\nAlibaba Risk Profile: Why BABA Isn't Right For EveryoneFundamental Risk Summary\n\n In our view, the most pressing risks to the Alibaba investment thesis are a sustained slowdown in Chinese consumption patterns, e-commerce competition, increased regulatory scrutiny, and the possibility that ancillary businesses divert management's attention and reduce profitability.China's e-commerce landscape has become increasingly competitive, with Pinduoduo registering faster GMV and user growth than Alibaba with the support of Tencent's traffic and its group-buying traffic generation method, and JD.com positioning itself as a credible rival through its fulfillment capability, quality assurance, and its partnerships with Tencent. These platforms do not yet have Alibaba's scale in China, but they specialize in specific products or services, or markets, which might impede Alibaba's growth.Alibaba is also subject to increased online and mobile payment regulation. Financial regulators in China have continuously scrutinized online and mobile payment services. Alibaba has persistently faced the issue of counterfeit and infringing goods on its marketplaces. Hangzhou government's assigning of representatives to work inside Alibaba also raise concerns of some investors, although there is no evidence of consequence of value destruction for Alibaba.Expansion into peripheral businesses might distract management, reduce profitability without materially improve Alibaba's ecosystem. While we're optimistic about Alibaba's ability to become a preferred partner for international retailers and consumer brands looking to sell in China, the firm does not enjoy the same network effect and brand recognition in other countries, and it may face challenges directly expanding in these markets...Like many other Chinese Internet companies listed in overseas markets, Alibaba operates under a\n variable interest entity, or VIE, structuredesigned to let companies bypass Chinese legal restrictions on foreign ownership in certain sectors.Alibaba's foreign investors will essentially hold shares of Alibaba's VIE domiciled in the Cayman Islands. We don't expect any legal challenges to VIE structures by the Chinese government in the future. However, if the legitimacy of Alibaba's related VIE is found to violate applicable law or regulation, Chinese regulatory authorities might take action against the VIE, including revoking the business and operating licenses of Alibaba's subsidiaries or the VIE, or discontinuing, restricting, or restructuring Alibaba's operations. Since the Chinese Ministry of Commerce has the jurisdiction to regulate VIEs, we believe overseas investors would have limited legal rights...Despite\n management's proven execution capabilities,\n we have concerns regarding Alibaba's corporate governance, which is reflected in our Poor equity stewardship rating.In our view,\n Alibaba is led by a capable and ambitious management team. Founder and former executive chairman Jack Ma has been the keeper of the flame since the company's founding in 1999. Under his leadership, Alibaba has become China's leading e-commerce player, accounting for the majority of transaction volume for China's online shopping industry.Over the past decade, Taobao has transformed the shopping behaviors of millions of Chinese consumers. We believe management has also done a commendable job developing and preserving Alibaba's wide economic moat by building several other leading online marketplaces and platforms such a Tmall, Juhuasuan, Alibaba.com, AliExpress, Alipay, AliCloud, and Ele.me. Although the company faces a potentially uneven long-term economic backdrop and new sources of competition in China,\n we remain confident that Alibaba can sustain its wide economic moat over the long term under its existing leadership.Ma's decision to step away from Alibaba's executive chairman role in 2019 and the company's board of directors will not affect our positive long-term bias for two reasons. First,\n we believe recent results demonstrate that Alibaba has a deep management bench,\n including current CEO Daniel Zhang(who was appointed CEO of Alibaba Group in May 2015, will assume the chairman role in 2019, and played a central role in the development of the Singles Day shopping event, building the Tmall platform from a regional to global business-to-consumer platform, and deploying several of Alibaba's \"New Retail\" strategies) and executive vice chairman Joe Tsai. Second, we believe Ma's involvement with the Alibaba Partnership--a group of core company managers--will allow him to stay involved with key strategic decisions...We harbor concerns about Alibaba's partnership structure, which might jeopardize the board's independence.The partnership is led by a committee of five, including Ma, executive vice chairman Joe Tsai, and CEO Daniel Zhang. The Alibaba Partnership has the exclusive right to nominate or appoint up to a simple majority of the members of its board of directors.Any board candidate it nominates is presented to shareholders for voting. If the candidate is not elected by shareholders, the partnership can appoint another candidate without a vote. That candidate will serve as an interim director until the next annual general meeting, where either the same candidate or yet another nominee proposed by Alibaba partners will stand for election.The current board of directors is composed of 11 directors, five of which are Alibaba Partnership nominees. Alibaba Partnership can also nominate or appoint two additional directors to the board, which would increase the number of directors to 13, and the Partnership will get majority control of the board.\n The Partnership essentially controls the board and limits the influence of outside shareholders.\" - Morningstar (emphasis added)\n\nMSCI, Reuters and Morningstar, as well as S&P, Fitch, and Moody's have concerns about BABA's corporate governance, which is factored into each company's respective rating on BABA's credit and material ESG risk (more on that later).\n\nall Chinese companies are speculative\nthus requiring a 5% higher margin of safety to be a potentially good buy (20% in the case of BABA)\ninvestors not comfortable with BABA's complex risk profile should not own it\nno company is right for everyone\n\nAlibaba ESG Risk Analysis: An Important Component Of A Company's Overall Financial Risk Profile (But Especially For Chinese Tech Companies)\n\ncritically important to anyone concerned about corporate governance and potential accounting fraud\n\nIn today's hyperpolarized political climate, some investors consider ESG to be political/personal ethics/opinion-driven nonsense.\nESG as measured by institutions is NOT simply the concern of \"woke\" and \"on-trend\" hippy millennials trying to virtue signal to impress Silicon Valley venture capitalists or social media followers.\n\n Companies with strong ESG profiles may be better positioned for future challenges and experience fewer instances of bribery, corruption, and fraud.\" - MSCI\n\nAccording to the world's best risk-assessors, ESG metrics are a critical component of a company's overall risk profile. Here's who considers ESG important and builds it into their safety models and ratings.\n\nBlackRock - #1 asset manager in the world\nMSCI - #1 indexing giant\nMorningstar\nReuters/Refinitiv\nISS (Institutional Shareholder Services) - #1 corporate proxy firm on earth\nS&P\nFitch\nMoody's\nDBRS (Canadian credit rating agency)\nAMBest (insurance industry rating agency)\n\nThe reason some investors consider ESG to be political is that some investors consider some industries to be inherently \"evil\" such as tobacco, energy, big tech, pharma, health insurers, fast-food, snack foods, and defense contractors.\n\nsuch opinions are personal and based on individual ethics\nESG scores as calculated by institutions are quantitatively based and focused on only fundamental financial risks to the underlying business\nthey are compared against industry peers and as objective as can be realistically expected\n\nPersonal ethical or political opinions are not what rating agencies or asset managers care about.\nMSCI rates over 2,800 global companies on 37 ESG metrics, using a quantitative and qualitative approach, just as all the rating agencies do, and Ben Graham recommended.\n\n Our global team of 185 experienced research analysts assesses thousands of data points across 37 ESG Key Issues, focusing on the intersection between a company's core business and the industry issues that can create significant risks and opportunities for the company. Companies are rated on an AAA-CCC scale\n relative to the standards and performance of their industry peers...\n\n\n\n The MSCI ESG rating model seeks to answer four key questions about companies:• What are the most significant ESG risks and opportunities facing a company and its industry?• How exposed is the company to those key risks and/or opportunities?• How well is the company managing key risks and opportunities?• What is the overall picture for the company and how does it compare to its global industry peers?\" - MSCI\n\n\n(Source: MSCI)\nThe ESG scores you find from the best risk-assessors in the world are not opinions based on political correctness.They use a quantitative approach to fundamental company risk analysis.One based on decades of historical data pertaining to minimizing the risk of fundamental deterioration, bankruptcy, and stock/bond investors getting wiped out.\n\nESG risk ratings + trends make up about 20% of the overall DK quality score for most companies that have an ESG rating from MSCI, Morningstar/Sustainalytics, and Reuters/Refinitiv\n\n\n\n(Source: MSCI)\n\nbased on the 12 material sustainability factors MSCI's 185 industry experts believe is important to financial risk for midstream companies, BABA scores are in the bottom 37% of its peers (below average)\nthat score is has been improving over the last four years\nthough it dipped one level in the 2020 annual update\n\nHow Morningstar/Sustainalytics Assesses Long-Term ESG Financial Risk\n\nMorningstar/Sustainalytics cares about material ESG variables that are historically correlated to a company's enterprise value (market cap + net debt)\nFinancial risk NOT political/personal ethical opinions are what Morningstar assesses\n20 fundamental metrics analyzed, compared to industry peers\n100 point risk scale\nlower is better\n\n\n\n\n\n\nEvery controversy surrounding BABA is factored into Morningstar ESG risk rating. That includes the controversies around anti-trust practices for which it's now under investigation by Chinese regulators.\n\nMorningstar considers this to be a medium ESG risk industry\nand management is doing an average job of managing that risk\nMorningstar scores BABA 26.2 \"medium risk\" in the bottom 25% of tech companies and in the top 43% of all 13,645 companies Morningstar rates\nrisk rating increased from 24.6 to 26.2 in the past year due to increasing regulatory concerns\n\nReuters/Refinitiv also provides ESG financial risk ratings.\n\nover 150 industry experts covering over 7,000 global companies\nbased on 400+ fundamental metrics\nand 178 materially important financial ESG risk factors\n\n\n\n\n(Source: Refinitiv)\n\n(Source: Interactive Brokers)\n\nReuters ranks BABA as in the bottom 30% of its peers on actual financial ESG risk\nin the top 40% in terms of environmental issues\nbottom 30% for social\nbottom 20% for corporate governance\nand near the very bottom of its industry on controversies\nfor a combined score that's in the bottom 10% of its peers\nwhich is why BABA's dependability score fell from 75% to 68% and resulted in a downgrade from 11/12 to 10/12 speculative quality (about two months ago)\nand why I'm looking to invest a maximum of $100K into BABA vs. $1 million into far lower risk Amazon\nrisks with BABA are far higher than with AMZN\n\nWhen no less than 10 of the world's most reputable risk assessors say something is important to long-term financial risk for a company you can be sure that Dividend Kings will include it in our 61 metric safety model and 126 point quality score (converted to a 100% scale).\n\nthere is no such thing as a \"risk-free\" company\nfactoring in all material financial risks is how you determine whether a company is appropriate for your needs\nand how we determine the margin of safety required to compensate us for that risk and thus determine potentially good buy prices or better\nno average investor can ever be a true expert on a company\nbut DK knows where to find the most reliable expert data to create a comprehensive safety, dependability, and quality score that includes every major risk factor a company has\n\nNo less than Ben Graham, the father of securities analysis considered qualitative factors critical to making prudent long-term investing decisions.\n\n... a satisfactory statistical exhibition is a necessary though by no means a sufficient condition for a favorable decision by the analyst.\"-Benjamin Graham, Security Analysis (1951 ed.), Page 76\n\nIn other words, Graham considered a combination of quantitative and qualitative analysis, looking at the past, present, and likely future, to be the optimal strategy for making sound long-term investments.\n\nDividend Kings uses risk ratings from eight of the world's most reputable agencies\nif fundamentals weaken our model will know it and our scores, ratings, and recommendations will change accordingly\n\nBottom Line: Alibaba Is Set To Soar And Too Cheap To Ignore\nI can't tell you what any stock will do over the next few weeks, months or even a year or two.\n\naccording to JPMorgan Asset Management, 92% of 12-month returns are a function of luck\nover 10+ years 90% to 91% of returns are a function of fundamentals\nover the long-term fundamentals are 11X as powerful as luck\n\nAlibaba represented one of the most undervalued hyper-growth tech blue-chips before this interest rate pullback in tech began.\nAlibaba's recent decline has been sharper than many peers, which isn't justified by its recent earnings results, or overall fundamentals.\nThe long-term growth outlook has gotten better, not worse.\nWhile BABA will always be an inherently speculative company, for those comfortable with the risk profile, a 42% margin of safety more than compensate for the risks you're facing.\nIn the coming years, BABA has the potential to deliver Buffett-like returns that are almost 6X the risk-adjusted returns of the S&P 500.\nEventually, the cash pile will grow so large, the company will be forced to start buying back stocks and paying dividends.\nA modest investment in BABA today could fund a comfortable or even lavish retirement purely from future dividends in a few decades.\nPrudent long-term investors know that through a disciplined application of financial science we never have to pray for luck. We make our own luck over time.\nWhen it comes to Alibaba, as close to a perfect hyper-growth blue-chip investment as exists on Wall Street today, the time to make our own luck is now.","news_type":1},"isVote":1,"tweetType":1,"viewCount":520,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":365930413,"gmtCreate":1614687430632,"gmtModify":1704774015341,"author":{"id":"3574558286837472","authorId":"3574558286837472","name":"Mxtinhzq","avatar":"https://static.tigerbbs.com/c915c3b8303c6bd800f52c911a79390f","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3574558286837472","authorIdStr":"3574558286837472"},"themes":[],"htmlText":"Would never buy Tesla stock on its own. Willonly buy ETF that includes with Tesla. Less risky.","listText":"Would never buy Tesla stock on its own. Willonly buy ETF that includes with Tesla. Less risky.","text":"Would never buy Tesla stock on its own. Willonly buy ETF that includes with Tesla. Less risky.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/365930413","repostId":"1105841550","repostType":4,"repost":{"id":"1105841550","kind":"news","pubTimestamp":1614600153,"share":"https://ttm.financial/m/news/1105841550?lang=&edition=fundamental","pubTime":"2021-03-01 20:02","market":"us","language":"en","title":"'Build Me An Ark': The Tsunami Of Risk Of Tesla-Bitcoin-Cathie Wood Is Coming","url":"https://stock-news.laohu8.com/highlight/detail?id=1105841550","media":"zerohedge","summary":"Summary:\n\n In today's equity update we are following up on our\n analysis of the Tesla-Bitcoin-Ark ri","content":"<p><u><b>Summary:</b></u></p>\n<blockquote>\n In today's equity update we are following up on our\n <b>analysis of the Tesla-Bitcoin-Ark risk cluster</b>showing an updated positions analysis, cross-correlations in the flagship Ark Innovation ETF, and an drawdown analysis. Yesterday, was another bad session for this risk cluster and Ark Invest had a day with outflows across all their ETFs highlighting that risk sentiment has changed. With the founder's bold move to increase the position in Tesla during the week the risk has gone up that this risk cluster could turn into an ugly forced selling dynamic causing pain in not only Tesla, Bitcoin, and Ark funds, but also US biotechnology stocks where Ark Invest is a major holder with high ownership in selected names.\n</blockquote>\n<p>A little over a month ago we first flagged the Tesla-Bitcoin-Ark risk cluster as something to take note off as short-term correlation between Tesla and Bitcoin was shooting up. A survey from Charles Schwab also confirmed our suspicion that there is a big overlap as these two instruments are among the top five holdings by millennials. Our analysis quickly led us to Ark Invest with its famous Ark Innovation ETF which had a big position in Tesla and its charismatic founder Cathie Wood is a big believer in the so-called disruptive innovation culture of Silicon Valley. This class of people believe firmly in technology as mainly good for society in all its aspects and that&nbsp;Bitcoin is a protection against future wealth confiscation&nbsp;which is most likely inevitable due to historically high wealth inequality.</p>\n<p>This disruptive innovation culture is powerful. It is presented by some of the wealthiest people of this planet. Endless presentation about innovation and institutions like the Singularity University promote these views. Behind Bitcoin you find a huge online marketing machine sucking ordinary people into the game. Recently wealthy people such as Elon Musk has openly supported Bitcoin, first in writing and later in action adding $1.5bn to Tesla’s balance sheet and thereby significantly increasing its earnings volatility. The triangle of Tesla-Bitcoin-Ark and their respective momentum has reinforced each other creating a positive feedback loop luring more investors into these instruments. As we have seen this week the ‘tower of risk’ is beginning to show cracks.</p>\n<p><b>Ark position update and Cathie Wood’s bold move and the risk to biotechnology</b></p>\n<p>This week Tesla-Bitcoin-Ark all came under pressure from negative voices in governments over Bitcoin and beginning noise over real competition for Tesla in the coming years. The risk cluster was clearly moving together, and correlations started rising. On Tuesday, volatility picked up across the board and at one point Cathie Wood felt it was necessary to go public supporting her funds and said that&nbsp;she had increased their position in Tesla&nbsp;using big numbers in the future to justify increasing the risk. This is a bold move, but it increases the risk considerably. When you are at risk of seeing sizeable outflows, you should start reducing the most illiquid positions first while you can control the situation. Because if you are forced to do it by redemptions the game changes dramatically.</p>\n<p>The tables below show updated Ark Invest positions as of yesterday’s close. There are still 26 stocks where Ark Invest holds more than 10% of the outstanding shares. This could become a serious problem if Ark Invest is suddenly caught in a negative feedback loop together with Tesla and Bitcoin. But also note how US biotechnology stocks are overrepresented in this list of stocks with high ownership in percentage of outstanding shares. If Ark Invest suddenly experience across the board outflows, like it did yesterday, then they can suddenly be the forced seller in US biotechnology stocks where they are the whale. This could cascade into the overall US biotechnology segment although the group is diverse.</p>\n<p><i>Stocks held by Ark Invest funds with combined ownership above 10% of outstanding shares</i></p>\n<p><img src=\"https://static.tigerbbs.com/b97684f80243d32efc06f3379d51d4fb\" tg-width=\"500\" tg-height=\"353\">Source: Ark Invest, Bloomberg, and Saxo Group</p>\n<p>The table below shows the largest positions across all funds. Here Tesla has now jumped to 7% of AUM and the first five positions now account for 21.6% of AUM. The five biggest stocks are Tesla, Teladoc Health, Square, Roku, and Baidu. Square just recently reported disappointing Q4 earnings and announced the purchase of $170mn of Bitcoin increasing the risk and feedback loop further in this risk cluster. In the Ark Innovation ETF itself, Tesla is now 10.2% of assets and together with Roku (6%) and Square (5.4%) these three stocks represent 21.6% of assets. If you look at the 10 largest positions in the Ark Innovation ETF then the red thread is that they all come with very high equity valuations and thus low implied equity risk premiums. They are all also mostly equity financed, except for Tesla, which means that the WACC, cost of capital, predominantly come from the cost of equity. With low implied equity risk premiums, the risk-free rate dominates much more than for a company such as say Microsoft or Apple. This means that the rising interest rates could suddenly cause a huge shift in equity valuations. Not because the future is different but because the cost of capital has changed.</p>\n<p><i>Top positions in terms of Ark Invest AUM across all funds</i></p>\n<p><img src=\"https://static.tigerbbs.com/7e06fcb66d5a52e629b48c9cab492586\" tg-width=\"500\" tg-height=\"302\">Source: Ark Invest, Bloomberg, and Saxo Group</p>\n<p><u><b>Correlations on the rise and drawdown outlier</b></u></p>\n<p>The best sign of risk going haywire is always fast rising cross-correlations whether it is on asset classes or single stocks. The chart below shows the 10-day moving cross-correlation in the Ark Innovation ETF since early 2020. It has recently moved to around 0.6 and while it is not a new record the direction is up and has been fast coming from only 0.2 from a few weeks ago. The next week will be critical for the Tesla-Bitcoin-Ark risk cluster as negative feedback loops can be violent and very unpredictable in their outcome.</p>\n<p><img src=\"https://static.tigerbbs.com/ab96aaafda10c2371b1d3a1a14c4a48a\" tg-width=\"500\" tg-height=\"280\"><i>Source: Bloomberg and Saxo Group</i></p>\n<p>Another way of looking at risk is by plotting Ark Innovation ETF drawdowns against that of Nasdaq 100 since December 2015.<b>The ETF has typically experienced a drawdown that is 1.22 times larger than that of Nasdaq 100</b>. As of yesterday, the ratio stands at 2.44 and thus illustrates that something idiosyncratic is taking place at Ark Innovation ETF.</p>\n<p><img src=\"https://static.tigerbbs.com/80db26e42e2910071718ff22a1ff3f2b\" tg-width=\"500\" tg-height=\"308\"><b>If outflows continue today and Tesla comes under pressure again then this indicator could very well hit a new record in terms of being an outlier signaling a negative feedback loop on risk has started.</b></p>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>'Build Me An Ark': The Tsunami Of Risk Of Tesla-Bitcoin-Cathie Wood Is Coming</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\n'Build Me An Ark': The Tsunami Of Risk Of Tesla-Bitcoin-Cathie Wood Is Coming\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-03-01 20:02 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.zerohedge.com/markets/build-me-ark-tsunami-risk-tesla-bitcoin-cathie-wood-coming><strong>zerohedge</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary:\n\n In today's equity update we are following up on our\n analysis of the Tesla-Bitcoin-Ark risk clustershowing an updated positions analysis, cross-correlations in the flagship Ark Innovation ...</p>\n\n<a href=\"https://www.zerohedge.com/markets/build-me-ark-tsunami-risk-tesla-bitcoin-cathie-wood-coming\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"ARKK":"ARK Innovation ETF","ARKQ":"ARK Autonomous Technology & Robotics ETF","ARKR":"Ark Restaurants Corp","ARKW":"ARK Next Generation Internation ETF","GBTC":"Grayscale Bitcoin Trust","ARKF":"ARK Fintech Innovation ETF","TSLA":"特斯拉","ARKG":"ARK Genomic Revolution ETF"},"source_url":"https://www.zerohedge.com/markets/build-me-ark-tsunami-risk-tesla-bitcoin-cathie-wood-coming","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1105841550","content_text":"Summary:\n\n In today's equity update we are following up on our\n analysis of the Tesla-Bitcoin-Ark risk clustershowing an updated positions analysis, cross-correlations in the flagship Ark Innovation ETF, and an drawdown analysis. Yesterday, was another bad session for this risk cluster and Ark Invest had a day with outflows across all their ETFs highlighting that risk sentiment has changed. With the founder's bold move to increase the position in Tesla during the week the risk has gone up that this risk cluster could turn into an ugly forced selling dynamic causing pain in not only Tesla, Bitcoin, and Ark funds, but also US biotechnology stocks where Ark Invest is a major holder with high ownership in selected names.\n\nA little over a month ago we first flagged the Tesla-Bitcoin-Ark risk cluster as something to take note off as short-term correlation between Tesla and Bitcoin was shooting up. A survey from Charles Schwab also confirmed our suspicion that there is a big overlap as these two instruments are among the top five holdings by millennials. Our analysis quickly led us to Ark Invest with its famous Ark Innovation ETF which had a big position in Tesla and its charismatic founder Cathie Wood is a big believer in the so-called disruptive innovation culture of Silicon Valley. This class of people believe firmly in technology as mainly good for society in all its aspects and that Bitcoin is a protection against future wealth confiscation which is most likely inevitable due to historically high wealth inequality.\nThis disruptive innovation culture is powerful. It is presented by some of the wealthiest people of this planet. Endless presentation about innovation and institutions like the Singularity University promote these views. Behind Bitcoin you find a huge online marketing machine sucking ordinary people into the game. Recently wealthy people such as Elon Musk has openly supported Bitcoin, first in writing and later in action adding $1.5bn to Tesla’s balance sheet and thereby significantly increasing its earnings volatility. The triangle of Tesla-Bitcoin-Ark and their respective momentum has reinforced each other creating a positive feedback loop luring more investors into these instruments. As we have seen this week the ‘tower of risk’ is beginning to show cracks.\nArk position update and Cathie Wood’s bold move and the risk to biotechnology\nThis week Tesla-Bitcoin-Ark all came under pressure from negative voices in governments over Bitcoin and beginning noise over real competition for Tesla in the coming years. The risk cluster was clearly moving together, and correlations started rising. On Tuesday, volatility picked up across the board and at one point Cathie Wood felt it was necessary to go public supporting her funds and said that she had increased their position in Tesla using big numbers in the future to justify increasing the risk. This is a bold move, but it increases the risk considerably. When you are at risk of seeing sizeable outflows, you should start reducing the most illiquid positions first while you can control the situation. Because if you are forced to do it by redemptions the game changes dramatically.\nThe tables below show updated Ark Invest positions as of yesterday’s close. There are still 26 stocks where Ark Invest holds more than 10% of the outstanding shares. This could become a serious problem if Ark Invest is suddenly caught in a negative feedback loop together with Tesla and Bitcoin. But also note how US biotechnology stocks are overrepresented in this list of stocks with high ownership in percentage of outstanding shares. If Ark Invest suddenly experience across the board outflows, like it did yesterday, then they can suddenly be the forced seller in US biotechnology stocks where they are the whale. This could cascade into the overall US biotechnology segment although the group is diverse.\nStocks held by Ark Invest funds with combined ownership above 10% of outstanding shares\nSource: Ark Invest, Bloomberg, and Saxo Group\nThe table below shows the largest positions across all funds. Here Tesla has now jumped to 7% of AUM and the first five positions now account for 21.6% of AUM. The five biggest stocks are Tesla, Teladoc Health, Square, Roku, and Baidu. Square just recently reported disappointing Q4 earnings and announced the purchase of $170mn of Bitcoin increasing the risk and feedback loop further in this risk cluster. In the Ark Innovation ETF itself, Tesla is now 10.2% of assets and together with Roku (6%) and Square (5.4%) these three stocks represent 21.6% of assets. If you look at the 10 largest positions in the Ark Innovation ETF then the red thread is that they all come with very high equity valuations and thus low implied equity risk premiums. They are all also mostly equity financed, except for Tesla, which means that the WACC, cost of capital, predominantly come from the cost of equity. With low implied equity risk premiums, the risk-free rate dominates much more than for a company such as say Microsoft or Apple. This means that the rising interest rates could suddenly cause a huge shift in equity valuations. Not because the future is different but because the cost of capital has changed.\nTop positions in terms of Ark Invest AUM across all funds\nSource: Ark Invest, Bloomberg, and Saxo Group\nCorrelations on the rise and drawdown outlier\nThe best sign of risk going haywire is always fast rising cross-correlations whether it is on asset classes or single stocks. The chart below shows the 10-day moving cross-correlation in the Ark Innovation ETF since early 2020. It has recently moved to around 0.6 and while it is not a new record the direction is up and has been fast coming from only 0.2 from a few weeks ago. The next week will be critical for the Tesla-Bitcoin-Ark risk cluster as negative feedback loops can be violent and very unpredictable in their outcome.\nSource: Bloomberg and Saxo Group\nAnother way of looking at risk is by plotting Ark Innovation ETF drawdowns against that of Nasdaq 100 since December 2015.The ETF has typically experienced a drawdown that is 1.22 times larger than that of Nasdaq 100. As of yesterday, the ratio stands at 2.44 and thus illustrates that something idiosyncratic is taking place at Ark Innovation ETF.\nIf outflows continue today and Tesla comes under pressure again then this indicator could very well hit a new record in terms of being an outlier signaling a negative feedback loop on risk has started.","news_type":1},"isVote":1,"tweetType":1,"viewCount":358,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":365994372,"gmtCreate":1614687227396,"gmtModify":1704774012741,"author":{"id":"3574558286837472","authorId":"3574558286837472","name":"Mxtinhzq","avatar":"https://static.tigerbbs.com/c915c3b8303c6bd800f52c911a79390f","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3574558286837472","authorIdStr":"3574558286837472"},"themes":[],"htmlText":"Ok","listText":"Ok","text":"Ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/365994372","repostId":"1134788930","repostType":4,"repost":{"id":"1134788930","kind":"news","pubTimestamp":1614657221,"share":"https://ttm.financial/m/news/1134788930?lang=&edition=fundamental","pubTime":"2021-03-02 11:53","market":"us","language":"en","title":"Looking For The Top Tech Stocks To Buy? 2 Reporting Earnings This Week","url":"https://stock-news.laohu8.com/highlight/detail?id=1134788930","media":"nasdaq","summary":"Are These The Best Tech Stocks To Buy This Week? 4 To WatchSponsored LinksMattress Can’t Fit In The ","content":"<p>Are These The Best Tech Stocks To Buy This Week? 4 To WatchSponsored LinksMattress Can’t Fit In The Lift? This Mattress Comes In A BoxSkyler Mattress</p><p>One shining quality shown by the tech industry is resilience. Amidst times of uncertainty,tech stockscontinue to outperform the broader market. Evidently, the tech-heavy Nasdaq Composite continues to outpace the broader market. In fact, it is up by over 47% over the past year, more than twice the gains of theS&amp;P 500. The most recent occurrence in the industry was a series of pullbacks on some of the top tech stocks. Despite all of that, many investors were quick to buy on the dip. Why might you ask? Well, it’s simple. The tech industry continues to innovate and cater to the needs of our increasingly tech-dependent world. In a sense, this would mean that there is always space for another tech stock to explode onto the scene.</p><p>For example, some of thetop semiconductor stockscontinue to see massive gains despite the current global chip shortage. ON Semiconductor (NASDAQ: ON) and Nvidia (NASDAQ: NVDA) are still looking at gains upwards of 150% since the March 2020 lows. Logically, this is because semiconductors are essentially the brains of modern electronics. From our cars and handheld devices to complex computing hardware and industrial systems, semiconductors are present. This is but <a href=\"https://laohu8.com/S/AONE.U\">one</a> instance of the prevalence of tech in our world. If all this has you looking for the latest movers in the tech industry, take a look at these four.</p><p>Top Tech Stocks To Buy&nbsp; [Or Avoid] This Week</p><ul><li><b><a href=\"https://laohu8.com/S/ZM\">Zoom</a> Video Communications Inc.</b>(NASDAQ: ZM)</li><li><b>Broadcom Inc.</b>(NASDAQ: AVGO)</li><li><b>Plug Power Inc.</b>(NASDAQ: PLUG)</li><li><b>Canaan Creative</b>(NASDAQ: CAN)</li></ul><p>Zoom Video Communications Inc.</p><p>First up is <a href=\"https://laohu8.com/S/AONE\">one</a> of the hottest names in tech coming out of 2020, Zoom. For the uninitiated, the cloud communications company has and continues to be a key service for the masses. Regardless of industry, those looking for a means to communicate while being socially distanced have turned towards Zoom. So much so, that the company’s name has become a household verb for making a video call. Similarly, most investors would be familiar with the meteoric rise of ZM stock throughout the past year. Despite its recent descent, the company’s shares have tripled over the past year. With Zoom set to release its latest quarterly report after today’s closing bell, it would not surprise if investors are watching it yet again.</p><p><img src=\"https://static.tigerbbs.com/91b89dda75c16eca4f89b37fd7f80cf5\" tg-width=\"759\" tg-height=\"468\" referrerpolicy=\"no-referrer\">Read MoreSource: TD Ameritrade TOS</p><p>For one thing, Zoom has been hard at work bolstering its existing services. To address the elephant in the room, most investors would be worried about the company’s post-pandemic viability. Well, last Wednesday, Zoom announced a new accessibility feature for its platform. The company launched “Live Transcription” and is now offering it for free to all users. With this new automatic closed caption feature, users with hearing disabilities can attend a Zoom call effortlessly. Will this make ZM stock worth investing in? Your guess is as good as mine.</p><p>Broadcom Inc.</p><p>Following that, we have global semiconductor supplier, Broadcom. In brief, the company designs, develop and manufactures semiconductors and infrastructure software products. Broadcom’s key end markets include data centers, networking, software, broadband, and other industrial markets. As you can imagine, it would have been busy over the last year given the immense demand for semiconductors throughout 2020. With the current chip shortages, Broadcom would be amongst the key players to step up to meet this demand. It seems that investors are well aware of this seeing as AVGO stock is up by over 160% since the March 2020 selloffs. With booming end markets, investors would likely be keeping an eye on AVGO stock ahead of its earnings this Thursday.</p><p><img src=\"https://static.tigerbbs.com/74ead7f716620cc56afa09475c7358e0\" tg-width=\"759\" tg-height=\"468\" referrerpolicy=\"no-referrer\">Source: TD Ameritrade TOS</p><p>For the most part, Wall Street expects the company to perform relatively well for the quarter. Current estimates suggest that Broadcom will report an earnings per share of $6.55 on revenue of $6.61 billion. This would mark a sizable bump from its revenue of $5.86 billion in the same quarter last year. Aside from that, CEO Tan Hock Eng also mentioned that its infrastructure software segment delivered solid results back in December as well. With the limelight on AVGO stock this week, will you consider adding it to your portfolio?</p><p>Plug Power Inc.</p><p>Another top tech company in focus now would be Plug Power. Indeed, most auto investors would be familiar with this electric vehicle (EV) pick-and-shovel play. With PLUG stock looking at gains of over 1,000% in the past year, this would be the case. For starters, the New York-based company develops hydrogen fuel cell technology which powers EVs. According to Plug Power, the company created the first commercially viable market for hydrogen fuel cell tech. Moreover, the likes of Amazon (NASDAQ: AMZN) and Walmart (NYSE: WMT) employ Plug Power’s turnkey solutions. For investors looking to invest in the growing industry, it would be among the go-to choices at the moment.</p><p>Source: TD Ameritrade TOS</p><p>Last Thursday, the company made two major announcements. Namely, Plug Power revealed its involvement in two massive projects in Asia and North America. Firstly, Plug Power completed a $1.6 billion capital investment into a partnership with South Korean business group, SK Group. Said investment will be put towards accelerating hydrogen as an alternative energy source in the Asian markets. On the local front, Plug Power announced that it is now working on building North America’s largest green hydrogen production facility in New York. With Plug Power seemingly firing on all cylinders, would you consider PLUG stock a buy?</p><p>Canaan Creative Inc.</p><p>Canaan is a China-based computer hardware manufacturer. It specializes in blockchain servers and ASIC microprocessor solutions that are used in bitcoin mining. Its high-performance computing solutions are used to solve complex problems efficiently. CAN shares are up by over 34% on today’s opening bell and currently trades at $20.70 as of 12:10 p.m. ET.</p><p><img src=\"https://static.tigerbbs.com/1c4a4917f30b10197590437a9ff985b8\" tg-width=\"759\" tg-height=\"468\" referrerpolicy=\"no-referrer\">Source: TD Ameritrade TOS</p><p>Last month, the company announced that its revenue visibility has improved substantially in 2021 as a result of attaining purchase orders totaling more than 100,000 units of bitcoin mining machines from customers in North America. A majority of these purchases were placed with prepayment and will likely occupy the company’s current manufacturing capacity for the full year of 2021 and beyond. Late last year, the company shifted its client base to most publicly traded companies which tend to place sizable orders with long-term commitment.</p><p>As a result, the company is able to forecast its revenue more precisely. This would give Canaan an edge in planning its production and logistics in advance. It will also allow the company to achieve profitable growth in the long run. With that in mind, will you consider buying CAN stock?</p><p>The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.</p>","source":"lsy1603171495471","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Looking For The Top Tech Stocks To Buy? 2 Reporting Earnings This Week</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nLooking For The Top Tech Stocks To Buy? 2 Reporting Earnings This Week\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-03-02 11:53 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.nasdaq.com/articles/looking-for-the-top-tech-stocks-to-buy-2-reporting-earnings-this-week-2021-03-01><strong>nasdaq</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Are These The Best Tech Stocks To Buy This Week? 4 To WatchSponsored LinksMattress Can’t Fit In The Lift? This Mattress Comes In A BoxSkyler MattressOne shining quality shown by the tech industry is ...</p>\n\n<a href=\"https://www.nasdaq.com/articles/looking-for-the-top-tech-stocks-to-buy-2-reporting-earnings-this-week-2021-03-01\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{},"source_url":"https://www.nasdaq.com/articles/looking-for-the-top-tech-stocks-to-buy-2-reporting-earnings-this-week-2021-03-01","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1134788930","content_text":"Are These The Best Tech Stocks To Buy This Week? 4 To WatchSponsored LinksMattress Can’t Fit In The Lift? This Mattress Comes In A BoxSkyler MattressOne shining quality shown by the tech industry is resilience. Amidst times of uncertainty,tech stockscontinue to outperform the broader market. Evidently, the tech-heavy Nasdaq Composite continues to outpace the broader market. In fact, it is up by over 47% over the past year, more than twice the gains of theS&P 500. The most recent occurrence in the industry was a series of pullbacks on some of the top tech stocks. Despite all of that, many investors were quick to buy on the dip. Why might you ask? Well, it’s simple. The tech industry continues to innovate and cater to the needs of our increasingly tech-dependent world. In a sense, this would mean that there is always space for another tech stock to explode onto the scene.For example, some of thetop semiconductor stockscontinue to see massive gains despite the current global chip shortage. ON Semiconductor (NASDAQ: ON) and Nvidia (NASDAQ: NVDA) are still looking at gains upwards of 150% since the March 2020 lows. Logically, this is because semiconductors are essentially the brains of modern electronics. From our cars and handheld devices to complex computing hardware and industrial systems, semiconductors are present. This is but one instance of the prevalence of tech in our world. If all this has you looking for the latest movers in the tech industry, take a look at these four.Top Tech Stocks To Buy  [Or Avoid] This WeekZoom Video Communications Inc.(NASDAQ: ZM)Broadcom Inc.(NASDAQ: AVGO)Plug Power Inc.(NASDAQ: PLUG)Canaan Creative(NASDAQ: CAN)Zoom Video Communications Inc.First up is one of the hottest names in tech coming out of 2020, Zoom. For the uninitiated, the cloud communications company has and continues to be a key service for the masses. Regardless of industry, those looking for a means to communicate while being socially distanced have turned towards Zoom. So much so, that the company’s name has become a household verb for making a video call. Similarly, most investors would be familiar with the meteoric rise of ZM stock throughout the past year. Despite its recent descent, the company’s shares have tripled over the past year. With Zoom set to release its latest quarterly report after today’s closing bell, it would not surprise if investors are watching it yet again.Read MoreSource: TD Ameritrade TOSFor one thing, Zoom has been hard at work bolstering its existing services. To address the elephant in the room, most investors would be worried about the company’s post-pandemic viability. Well, last Wednesday, Zoom announced a new accessibility feature for its platform. The company launched “Live Transcription” and is now offering it for free to all users. With this new automatic closed caption feature, users with hearing disabilities can attend a Zoom call effortlessly. Will this make ZM stock worth investing in? Your guess is as good as mine.Broadcom Inc.Following that, we have global semiconductor supplier, Broadcom. In brief, the company designs, develop and manufactures semiconductors and infrastructure software products. Broadcom’s key end markets include data centers, networking, software, broadband, and other industrial markets. As you can imagine, it would have been busy over the last year given the immense demand for semiconductors throughout 2020. With the current chip shortages, Broadcom would be amongst the key players to step up to meet this demand. It seems that investors are well aware of this seeing as AVGO stock is up by over 160% since the March 2020 selloffs. With booming end markets, investors would likely be keeping an eye on AVGO stock ahead of its earnings this Thursday.Source: TD Ameritrade TOSFor the most part, Wall Street expects the company to perform relatively well for the quarter. Current estimates suggest that Broadcom will report an earnings per share of $6.55 on revenue of $6.61 billion. This would mark a sizable bump from its revenue of $5.86 billion in the same quarter last year. Aside from that, CEO Tan Hock Eng also mentioned that its infrastructure software segment delivered solid results back in December as well. With the limelight on AVGO stock this week, will you consider adding it to your portfolio?Plug Power Inc.Another top tech company in focus now would be Plug Power. Indeed, most auto investors would be familiar with this electric vehicle (EV) pick-and-shovel play. With PLUG stock looking at gains of over 1,000% in the past year, this would be the case. For starters, the New York-based company develops hydrogen fuel cell technology which powers EVs. According to Plug Power, the company created the first commercially viable market for hydrogen fuel cell tech. Moreover, the likes of Amazon (NASDAQ: AMZN) and Walmart (NYSE: WMT) employ Plug Power’s turnkey solutions. For investors looking to invest in the growing industry, it would be among the go-to choices at the moment.Source: TD Ameritrade TOSLast Thursday, the company made two major announcements. Namely, Plug Power revealed its involvement in two massive projects in Asia and North America. Firstly, Plug Power completed a $1.6 billion capital investment into a partnership with South Korean business group, SK Group. Said investment will be put towards accelerating hydrogen as an alternative energy source in the Asian markets. On the local front, Plug Power announced that it is now working on building North America’s largest green hydrogen production facility in New York. With Plug Power seemingly firing on all cylinders, would you consider PLUG stock a buy?Canaan Creative Inc.Canaan is a China-based computer hardware manufacturer. It specializes in blockchain servers and ASIC microprocessor solutions that are used in bitcoin mining. Its high-performance computing solutions are used to solve complex problems efficiently. CAN shares are up by over 34% on today’s opening bell and currently trades at $20.70 as of 12:10 p.m. ET.Source: TD Ameritrade TOSLast month, the company announced that its revenue visibility has improved substantially in 2021 as a result of attaining purchase orders totaling more than 100,000 units of bitcoin mining machines from customers in North America. A majority of these purchases were placed with prepayment and will likely occupy the company’s current manufacturing capacity for the full year of 2021 and beyond. Late last year, the company shifted its client base to most publicly traded companies which tend to place sizable orders with long-term commitment.As a result, the company is able to forecast its revenue more precisely. This would give Canaan an edge in planning its production and logistics in advance. It will also allow the company to achieve profitable growth in the long run. With that in mind, will you consider buying CAN stock?The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.","news_type":1},"isVote":1,"tweetType":1,"viewCount":344,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"hots":[{"id":160161319,"gmtCreate":1623775195831,"gmtModify":1703819182631,"author":{"id":"3574558286837472","authorId":"3574558286837472","name":"Mxtinhzq","avatar":"https://static.tigerbbs.com/c915c3b8303c6bd800f52c911a79390f","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3574558286837472","authorIdStr":"3574558286837472"},"themes":[],"htmlText":"Amazon and Google is here to stay for the long haul. Big players, stable investment but hard for small time investors to see ROI.","listText":"Amazon and Google is here to stay for the long haul. Big players, stable investment but hard for small time investors to see ROI.","text":"Amazon and Google is here to stay for the long haul. Big players, stable investment but hard for small time investors to see ROI.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":4,"repostSize":0,"link":"https://ttm.financial/post/160161319","repostId":"1127823989","repostType":2,"repost":{"id":"1127823989","kind":"news","pubTimestamp":1623253090,"share":"https://ttm.financial/m/news/1127823989?lang=&edition=fundamental","pubTime":"2021-06-09 23:38","market":"us","language":"en","title":"Amazon: A No-Brainer For The Next 10 Years","url":"https://stock-news.laohu8.com/highlight/detail?id=1127823989","media":"seekingalpha","summary":"The recent approval of Amazon Pharmacy provides a huge TAM.Amazonis one of the best-known companies in the world, it seems difficult to discover something new in it but the reality is that there is a lot to discover. After performing this in-depth analysis of Amazon, I have realized that most segments are in their early stages. The current valuation is very attractive considering that they are just scratching the surface of the potential of these divisions.Amazon Healthcare has a huge TAM throug","content":"<p><b>Summary</b></p>\n<ul>\n <li>Amazon maintains high advertising potential.</li>\n <li>The recent approval of Amazon Pharmacy provides a huge TAM.</li>\n <li>The company has an interesting future operating leverage due to high capex deployed in logistics.</li>\n</ul>\n<p><b>Investment Thesis</b></p>\n<p>Amazon(NASDAQ:AMZN)is one of the best-known companies in the world, it seems difficult to discover something new in it but the reality is that there is a lot to discover. After performing this in-depth analysis of Amazon, I have realized that most segments are in their early stages. The current valuation is very attractive considering that they are just scratching the surface of the potential of these divisions.</p>\n<p>Amazon Healthcare has a huge TAM through Amazon Pharmacy and Amazon Care (telemedicine). Both divisions are newly approved, so as of today, they contribute virtually nothing to Amazon's bottom line.</p>\n<p>The retail part has a long way to go, with a lot of room for growth with its omnichannel for supermarkets, increases in ARPU, FBA.</p>\n<p>On the other hand, digital advertising is eating the world, and Amazon has recently been getting into it (since 2015). Part of Amazon's advertising five years ago was generating hardly any profit, now it is doubling revenues every two years and this has just begun. Amazon is the most powerful product marketplace globally, so it makes perfect sense that the wild growth in advertising continues to grow at high rates.</p>\n<p>We still have the optionality in gaming, the growth in prime ARPUs, the Audio and Video division, in short, numerous segments that have not yet started to contribute sales and Amazon is currently trading at about 35x normalized FCF, expensive? In our opinion considerably cheaper than the multiples at which the market is trading.</p>\n<p><b>Product</b></p>\n<p>Amazon is a company that has always had a long-term focus. This means that since its inception, it has renounced short-term profitability to become one of the most important companies in the world in the long term. There is no doubt that it has achieved this goal and we are right at the moment where Amazon is beginning to reap what has been sown for so many years.</p>\n<p>In its early days, Amazon focused on the user experience when shopping online. Amazon offered a simple, accessible and universal way to buy products to guarantee the highest number of reviews and arrive in record time. In addition, acquiring a product on Amazon carries the guarantee of delivery of the same; this means that if you have any kind of problem with the reception of the product, Amazon solves it in record time.</p>\n<p>This first phase has been very successful and has been the foundation of Amazon 2.0, which has been integrating more and more services and improving its original product: e-commerce. This image summarizes very well the evolution of Amazon from a Prime 1.0 to a Prime with a much higher added value.</p>\n<p><img src=\"https://static.tigerbbs.com/d99378da746d0c3e0141d21e45729e0d\" tg-width=\"533\" tg-height=\"357\" referrerpolicy=\"no-referrer\">Thanks to this user experience created by Amazon, it has been one of the main contributors (or rather the main contributor) to the explosive evolution of e-commerce, making its penetration increasingly higher and its growth very high.</p>\n<p>According toStatistadata, e-commerce penetration worldwide is 50.8% in 2021 and is expected to reach 63.1% in 2025. Average spending per person exceeds $700 per year. Between 2020 and 2025, e-commerce revenues are expected to grow by 50%, so far from being a mature market, it is still growing strongly.</p>\n<p><b>Amazon Prime</b></p>\n<p>We all know what this service entails, so I am not going to explain it at length. More and more new services are being integrated into Amazon Prime, making it one of the must-have subscriptions for users.</p>\n<p>A chronological summary of Amazon's evolution in the US (its most mature market) is essential to understand the evolution of prices and value-added over time.</p>\n<p>Amazonlaunches Prime subscription in the US in 2005for $79 per year. In 2006, Amazon moved forward and launched Fulfilled by Amazon. This service allows sellers to have a store on Amazon and ship their products for a fee. These products then become eligible for Amazon Prime, increasing the assortment and selection available to customers.</p>\n<p><img src=\"https://static.tigerbbs.com/26ee6071f10355c56905089335e248a9\" tg-width=\"640\" tg-height=\"264\" referrerpolicy=\"no-referrer\">Starting in 2011, Amazon included Prime Video in subscriptions, which meant 5,000 movies and series for every subscriber.</p>\n<p>2014 was a great year for Prime, not only because there were many new services added, but also because there was the first price increase, Amazon raises from $79 to $99 the subscription in the U.S. This same year Amazon Prime Pantry is launched, offering customers the ability to buy essential supermarket products (toilet paper, drinks, creams) for a meager fee and regularly. Also in 2014, Amazon Music was launched with the Prime subscription, giving access to a catalog of 60M songs, on a par with the best streaming services. Amazon photos are also launched, a service that offers high-resolution photo storage with Amazon's own subscription. Finally, Amazon launches; Amazon Now, a supermarket service in which you receive your products in 2 hours (or one in certain areas) with free shipping cost from $ 50.</p>\n<p>In 2015 Amazon Prime Day was created to celebrate the 20th anniversary, in which 24 hours offers to appear to be the day of Amazon's biggest sale since its launch.</p>\n<p>In 2016, same-day delivery to 27 metropolitan areas was introduced. Prime also joins Prime, Prime Reading, which offered more than 1,000 books and magazines free of charge.</p>\n<p>In 2017, an agreement was formed with Chase to create a credit card that offers Prime subscribers at no added cost a 5% cash back at Amazon or Whole Foods for purchases made. Prime Wardrobe is also launched in 2017, a service that allows you to try on clothes, jewelry or similar in a period of 7 days before having to pay. That same year Amazon Key is launched, a smart lock that allows opening the home from the Smartphone to trusted people (seeing through an integrated camera), open the door from your own Smartphone or with a personal code. In addition to this, it allows Prime members to receive Amazon packages in their garage, house, without needing a key, simply through the APP.</p>\n<p>In 2017, the acquisition of Whole Foods was made, which is integrated into Amazon with discounts, free shipping or cashback when paying by card.</p>\n<p>In 2018 comes a second price increase from $99 to the current $119, an increase of $40 since its launch in 2005.</p>\n<p>In 2019, Amazon Fresh launched Prime subscribers, offering free in select cities fresh grocery delivery service.</p>\n<p>Finally, in 2020 Amazon Prime Gaming is launched, a service built into the Prime subscription that provides free games, exclusive gaming content and a free Twitch subscription.</p>\n<p>The evolution of Prime has been impressive, incorporating new services year after year to make Amazon's subscription indispensable in our lives. Seeing the evolution in subscribers, it seems evident that it has achieved its purpose.</p>\n<p>Prime's evolution has taken us to200M subscribers in 2020globally of which 153M are from the US.</p>\n<p><img src=\"https://static.tigerbbs.com/98abbd226ea68e7b6dd19537677a9888\" tg-width=\"588\" tg-height=\"374\" referrerpolicy=\"no-referrer\">Source: Emarketer, Statista</p>\n<p>Given the penetration, Prime's growth has slowed down in recent years, although users are becoming more and more accustomed to the service and it is becoming one of the essential subscriptions. This in our opinion, will lead to pricing power, something we have already seen in the United States, where the price for the subscription is substantially higher than the international subscription.</p>\n<p>Below is a comparison of subscription costs in different countries:</p>\n<p><img src=\"https://static.tigerbbs.com/250693f17a1239d59514520d8656fecb\" tg-width=\"343\" tg-height=\"373\" referrerpolicy=\"no-referrer\">Prices have risen compared to2018(these are as of year-end 2020). It is expected that prices will continue to rise gradually to generate higher earnings per user (ARPU).</p>\n<p>The first thing we notice is that the disparity between countries is high. In my opinion, where there is more room for prices to converge is in Europe, as Prime becomes more mature and incorporates higher quality content (as it has done in the US). This table shows that there is still a long way to go in terms of ARPU. Even in the US the price of an Amazon Prime subscription, taking into account everything included (music, video, access to Pharmacy, free shipping, storage), is well below other comparable subscriptions.</p>\n<p>Penetration in the United States is at its highest, 77% of people who buy on Amazon are Prime users. In 2020 this percentage was 67% so we have substantial growth; in fact it is one of the highest growth rates in the last decade.</p>\n<p>The Prime user is more profitable since he/she tends to spend 2-3 times more per month than a non-Prime user. In e-commerce, Amazon is the clear dominator with amarket sharein the United States of more than 50%. Being the clear dominator in a market thatwill grow at double digitsfor the next 5 years (probably also for the next 10 years) is undoubtedly very interesting. Another important point is that retail is a huge market where Amazon is just scratching the surface but has certainly positioned itself to capture more and more market share as the years go by. Amazon has only9% ofUS retail sales, while Walmart has 9.5%. To give you a sense of Amazon's traction, in 2019 it only had 6.8%. Although it is clear that COVID has helped it gain traction, over the years it has always been gaining more market share. Amazon knows this and is substantially increasing fulfillment CAPEX.</p>\n<p>The maturity of the Prime subscriber is also something important. As the years go by the Prime subscriber tends to consume more, so we could say that even a Prime subscriber has a rump-up period as we can see in this graph:</p>\n<p><img src=\"https://static.tigerbbs.com/5636145e9a1d04a4f1d4f1643c0550a1\" tg-width=\"436\" tg-height=\"252\" referrerpolicy=\"no-referrer\">In certain markets such as India, where Amazon has focused a lot of attention and investment, Prime membership growth has been exceptional. According to the head of Prime in the country, Prime membership has doubled between 4Q17 and 2Q19. While some of that growth may have been driven by Amazon's material investment in local digital content and Prime rate incentives, we believe many of these members will become more engaged retail customers as their financial situation improves over time.</p>\n<p>There are doubts about whether the momentum resulting from COVID in e-commerce will slow down with the reopening of e-commerce. Data from the first quarter of 2021 (with a reasonable reopening) shows that far from slowing down, growth has even accelerated above pre-COVID levels. This makes sense as certain users are reluctant to shop online and have been relatively forced during the quarantine. Having made purchases online has allowed them to lose that fear and become e-commerce users that would have taken longer to become so had it not been for COVID.</p>\n<p>Currently, 66% of GMVs (Gross Merchandise Value or total amount transacted in resales without discounts) come from the United States, the most mature market. In the future, the projection is that the mix of GMVs between US and Non-US will converge to 50% since it is in the rest of the markets where growth is currently highest.</p>\n<p>Market penetration is gradual and to get an idea of how it is evolving; we must look at the most mature market: the United States.</p>\n<p><img src=\"https://static.tigerbbs.com/fa586d6b9e788420999aa48c50811040\" tg-width=\"553\" tg-height=\"351\" referrerpolicy=\"no-referrer\">Currently, 67% of U.S. households with internet have a Prime subscription.</p>\n<p><b>Fulfillment by Amazon (FBA)</b></p>\n<p>More than half of the units purchased on Amazon's global marketplaces are sold by third-party merchants: sellers large and small who benefit from having access to Amazon's millions of customers. Your Seller Care business enables you to offer a wide selection of products by engaging these sellers and helping them manage their business on the platform.</p>\n<p>Fulfillment by Amazon (FBA) is a program that allows sellers to ship their inventory to Amazon's distribution centers, where they create, pack and ship orders for them, as well as handle customer service and returns for them. Their products become part of the Prime program, so they reach an even larger audience, and the seller spends fewer resources on inventory management and shipping.</p>\n<p>FBA started in 2005 with just a handful of vendors. Teams of business and technical professionals build all the systems that enable it, including tools that provide real-time data and reports and allow companies to manage their inventories remotely and from any device.</p>\n<p>The fulfillment part benefits from operational leverage, managing to contain unit costs and generating a higher and higher free cash flow. To understand the service in greater depth, we can look at Amazon's FBA service fees to third parties, which occupy almost 50% of the GMVs.</p>\n<p><img src=\"https://static.tigerbbs.com/1165bbedf3c99919df3b86f97386eb31\" tg-width=\"640\" tg-height=\"316\" referrerpolicy=\"no-referrer\">Amazon has been investing in its fulfillment network for many years, reinforcing its increasingly evident MOAT regarding logistics capacity and customer experience. So high has been the deployment of Capex that today it even rivals companies whose core business is precisely that:</p>\n<p><img src=\"https://static.tigerbbs.com/b2b35107ea150c8462f41cf6ff2f1975\" tg-width=\"431\" tg-height=\"213\" referrerpolicy=\"no-referrer\">Source: Annual report, FactSet estimates</p>\n<p>With the scale that Amazon has acquired, it would not be unreasonable to become a more efficient logistics platform than even pure competitors.</p>\n<p><img src=\"https://static.tigerbbs.com/d093110e0653de7cd4b486dbcf1543f4\" tg-width=\"640\" tg-height=\"253\" referrerpolicy=\"no-referrer\">The graph shows how the simplest route an order can take is directly from the seller to the buyer through a third-party service, where Amazon never actually touches the product, only puts the Marketplace.</p>\n<p>For orders that do go through Amazon's network, the company groups inventory into three different categories:</p>\n<ol>\n <li>Small classifiable: consumer items that make up the majority of the business. These are everyday items such as books, video games, and small-weight items.</li>\n <li>Large sortable: Items with a higher weight may require more manual systems due to their size.</li>\n <li>Large unsortable: Items that due to their size or weight, are handled with less automation, often in different locations and require more specialization for their preparation, such as specific packaging. Most of these shipments are delivered by third parties, mostly XPO.</li>\n</ol>\n<p>Small and large collection and packaging facilities are usually located in the same building but separate divisions.</p>\n<p>A key defining characteristic of small and large sortable items is that they can fit into a box placed on a conveyor belt for automatic sorting.</p>\n<p>Intuitively, small sortable items are also where the company has implemented the most automation, including robotic picking functionality.</p>\n<p>2013 was a turning point for FBA. We are talking about the 1,050 fulfillment network points today; only 58 were open before 2014, or 5%. Before 2014 there were no airports; there was hardly any infrastructure compared to today. 2020 is once again a turning point; 45% of fulfillment centers have been or will be built after 2020.</p>\n<p>This has undoubtedly been reflected in the 2020 CAPEX, which has risen considerably compared to previous years, from 5% to 9%. Excluding the increase in 2020 CAPEX, annualized growth since 2013 is 37%, above sales growth. Not all of this growth is due to fulfillment. Still, reading the letters from management, it is clear that a large part of this growth comes from this division, saying that the costs associated with \"last mile delivery\" had increased substantially.</p>\n<p><img src=\"https://static.tigerbbs.com/ab81f81d8d08e98fa4819e90b6a553e1\" tg-width=\"581\" tg-height=\"420\" referrerpolicy=\"no-referrer\">This Capex is reflected in the evolution of the square meters of fulfillment:</p>\n<p><img src=\"https://static.tigerbbs.com/5eb5e8f0ce6c11a4e1a96e2ab8002586\" tg-width=\"574\" tg-height=\"322\" referrerpolicy=\"no-referrer\">Growth in line with all of the above.</p>\n<p>Amazon is also increasing its aircraft fleet, which started in 2016 following the agreement with ATSG and Atlas Air to lease 40 aircraft (20+20). Currently, the fleet of aircraft under lease is 82 plus 11 owned aircraft, a total of 93, so it has more than doubled the fleet in less than 5 years. These movements make clear Amazon's intentions to boost the air service. If it continues simultaneously, we would have about 200 aircraft in 2016 between leasing and ownership.</p>\n<p>In the following image, we can see Amazon's air gateway network, with its usual spans. The network represents a key piece of the company's proprietary distribution network that has not been replicated by any other retailer and is a key function that allows Amazon to operate without the networks of third-party carriers.</p>\n<p><img src=\"https://static.tigerbbs.com/9eeec3e1927a51a580d7007e6caba3c2\" tg-width=\"640\" tg-height=\"535\" referrerpolicy=\"no-referrer\">Source: Chaddick Institute</p>\n<p>In Europe, it also has a network in the main capitals: Madrid, Barcelona, Paris, Milan, Rome, Cologne and Leipzig.</p>\n<p>The current gap in the fleet is significant concerning UPS and FedEx, but Capex is deploying Amazon would not be surprised to have a similar fleet by 2030.</p>\n<p>And all this for what? Considering how much Amazon is spending on logistics, it's clear it has a purpose. FBA sales went from $1b in 2011 to $40b in 2020, a significant jump. Rumors indicate that Amazon would like to start competing with UPS and FedEx in offering their services not only for its Marketplace but also for third parties. This may be indicative of the program launched in 2017 \"Seller Flex) which is a variant of the FBA program but in-house. This means that you can leverage Amazon's logistics tools without having to deposit inventory in Amazon's fulfillment centers. This is already a very similar service to that provided by pure shipping players.</p>\n<p>Following the launch of FBA Onsite, Amazon began internal testing of Amazon Shipping, a third-party shipping service that complemented FBA onsite. Early on reports suggested that Amazon would be able to undercut third-party carriers by leveraging the capacity it already used for its own deliveries and eliminating added costs. After more than two years, Amazon Shipping remains an internal trial put on hold by the arrival of COVID, as Amazon itself needed all of its logistics capacity for internal use.</p>\n<p>Is there really an opportunity here? Let's look at the sales and operating profit of the main players: UPS and FedEx.</p>\n<p><img src=\"https://static.tigerbbs.com/44a8276c53a9261ed6a84a8607ce87e9\" tg-width=\"356\" tg-height=\"113\" referrerpolicy=\"no-referrer\">Between them they generate 40% of Amazon's sales and 53% of operating profit. Obviously, Amazon will not capture all the business from both, but it gives us an idea that it is a large market that can provide incremental sales for Amazon.</p>\n<p>Considering all the opportunities on the table: Pharmacy, Grocery, Gaming, Advertising) Amazon Shipping will likely be delayed for a while, not one of the most immediate priorities. The deployed Capex itself serves for internal use with much more intense value chain control.</p>\n<p>We can really see the benefits of that CAPEX for fulfillment in the gross margin. The cost of sales is associated with Amazon's shipping costs, both in-house and through third parties. As in-house shipping has been gaining scale through CAPEX deployment, the gross margin has been increasing, and this is entirely normal given that this segment is pure volume. This means that a company that does not move Amazon's volume will not be compensated for the Capex deployed by Amazon. Still, on the other hand, a company like Amazon that increases the number of shipments in double digits year after year shows that the higher the volume, the higher the cost savings per shipment that the CAPEX deployed will compensate. This is a key point, as Amazon has a greater weight in own shipping and less in third parties, it will acquire a higher gross margin because the cost of own shipping is significantly lower than using a third party such as UPS or FedEx.</p>\n<p><b>AWS</b></p>\n<p>We believe that AWS will continue to be the dominant player in IaaS/PaaS as it captures most of the future growth in the industry due to its huge customer base.</p>\n<p>There should be plenty of growth opportunities for all three vendors. Gartner's forecast for IaaS and PaaS implies a 25% revenue CAGR between 2020 and 2023 and a market of nearly $200 billion by 2023.</p>\n<p><img src=\"https://static.tigerbbs.com/c931481c0a035bcced96f4f401235488\" tg-width=\"630\" tg-height=\"423\" referrerpolicy=\"no-referrer\">As for margins, they have danced between 20-30% despite aggressive pricing plans with a total of 20 discounts between 2018 and 2020 and so far 1 in 2021. The drop in margins in 2019 was due to an increase in investments for sales and marketing issues, which was only a short-term issue.</p>\n<p><img src=\"https://static.tigerbbs.com/13a64e7975829481aa0bedba683c33fa\" tg-width=\"586\" tg-height=\"353\" referrerpolicy=\"no-referrer\">Amazon is the clear dominator in the cloud market and although it has lost market share in recent years, this has not prevented it from growing at very high rates. What's interesting? The expectation is that thecloud marketwill grow from 2020 to 2025 at a compound rate of 17.5%. Considering that it is currently the company's division with the best margins, this is great news for Amazon's future.</p>\n<p>Amazon'sbacklogis accelerating its growth; we talk about the last year has grown more than 50% YoY while AWS sales growth is more in line with 30%. The backlog is contracts with an average maturity period of 3 years that end up materializing in sales, so seeing the rate at which it is growing is certainly very interesting.</p>\n<p>Backlog contracts are usually with large companies to whom they make offers with consequent price cuts. AWS is being aggressive but can afford to be given the margins it operates on.</p>\n<p>The backlog currently exceeds $50b, which should materialize over an average period of 3 years. This will be AWS sales but does not mean that these are the only sales that will materialize as there will continue to be growth in shorter-term contracts as at present.</p>\n<p><img src=\"https://static.tigerbbs.com/24e0033a5094a6f45b6cf02363014fcd\" tg-width=\"575\" tg-height=\"347\" referrerpolicy=\"no-referrer\">Source: Annual Report &amp; Morgan Stanley Estimates</p>\n<p>This graph shows exciting data. As I mentioned, the backlog has accelerated its growth while sales per se have been maintained (the last quarters). In the medium term, both curves will tend to converge.</p>\n<p><b>Supermarket</b></p>\n<p>The supermarket sector is gigantic and today, Amazon's US market share in this segment is less than 3% of 2020 sales. Considering that Amazon's penetration in this segment is increasingly higher and that Amazon is learning more and more due to the integration of Whole Foods and the opening of Fresh, Go stores and above all, physical locations.</p>\n<p>The opening of the first Amazon Fresh store in California is very recent; we are talking about September 2020 and from that date until May 2020 the number has risen to 12. Considering the pace of openings, it is clear that Amazon wants to focus on an Omnichannel model where you can buy physically or online, whichever best suits your needs at any given time.</p>\n<p>Amazon stores average 35,000 feet in size, selling about $754 per foot, in line with comparables such as (Wegmans, Kroger, Ahold) so the pace of Amazon's store rollout will mean interesting incremental sales (depending on the number of stores)</p>\n<p>On the other hand Amazon is focusing on the consumer experience.Amazon Dash Cartis turning the shopping experience into something totally different. It will have a small initial learning curve for the consumer, but it substantially improves the supermarket shopping experience once the concept is understood. We are talking about a supermarket cart with intelligence to account for every product you put inside automatically. You can leave with the purchase without having to go through the checkout or similar, and to all this add, it lets you know how much you have spent at each moment, making the experience much more efficient.</p>\n<p>Therefore Amazon offers an omnichannel experience in which you can buy online and receive same-day delivery for free (on orders over $50 for prime users). You can also place the order and pick it up at the store or simply buy it in the store itself; let's say it's a similar approach to Inditex.</p>\n<p>Having the ability to do click &amp; collect or simply order to home delivery allows stores to leverage stores in various ways that will generate operational leverage and increased margins as order volumes increase.</p>\n<p>The current trend is towards healthy food and in Amazon Fresh Stores, there is ample space for fresh and prepared food; we have space for fresh seafood, a sushi bar or even fresh pizza in the supermarket itself.</p>\n<p>Reviews of the Amazon Fresh stores on google are very positive, with an average of 4.3 stars across all 12 locations and over 3,000 votes.</p>\n<p>In a survey conducted by UBS in its 7th annual eCommerce survey, all respondents were asked the main reasons for buying online. With 43% of the answers, the most chosen was the convenience and comfort of doing it. It was a key point for the penetration to continue increasing since it is not because of something temporary such as prices, greater selection, but because of something structural.</p>\n<p>On the opposite side, reasons for not buying online would be in the first position with 45% \"I prefer to see and touch the product.\" Another main reason is that it is easier to buy physically and this can be key, making online shopping more accessible with improvements to the process itself.</p>\n<p>To get an idea of how the Amazon Groceries process works we have the following scheme:</p>\n<p><img src=\"https://static.tigerbbs.com/177141503cc09a782b0fc3ec7df8cd63\" tg-width=\"640\" tg-height=\"309\" referrerpolicy=\"no-referrer\">Looking at the schematic, it is easy to understand how Whole Foods fits into the process. Having incorporated physical stores, they serve as a logistics hub for shipments, allowing Amazon to improve efficiency.</p>\n<p>In addition to being focused on all the aspects mentioned above, Amazon has also been concerned about generating its own brand, where margins are higher. An example of Amazon's own brands can be seen below.</p>\n<p><img src=\"https://static.tigerbbs.com/10f30cc5515047623531828738fa6180\" tg-width=\"640\" tg-height=\"293\" referrerpolicy=\"no-referrer\">Especially in the last few years (since 2017), Amazon's own brand has been significantly boosted. We talked about that in 2017 there were less than 20 Amazon own brands and very few products for sale. Currently, it has more than 120 own brands and 22,617 available. In addition, Amazon's own brand has an average of 4.3 stars reflecting consumer satisfaction levels.</p>\n<p><b>Amazon Ads</b></p>\n<p>This is one of the biggest surprises and most undervalued assets that Amazon currently has. Advertising revenue is a source of income that is growing at an accelerated rate; we are talking about the fact that only 5 years ago, it was non-existent and now it is doubling every two years:</p>\n<p><img src=\"https://static.tigerbbs.com/1174f49304a8d987eeffaabd69393d14\" tg-width=\"548\" tg-height=\"412\" referrerpolicy=\"no-referrer\">This evolution makes sense, considering that Amazon is the most powerful showcase globally to sell products, so being able to appear in the top positions is undoubtedly something very interesting for products. We are talking about a gigantic market where Amazon is just scratching the surface.</p>\n<p>Considering the advertising spending of listed defensive consumer companies, we can get an idea of the size of this market, where Amazon has not yet monetized practically anything. Proof of the potential is simply to look at the growth in sales over the last few years, which gives us an idea of what is behind this market.</p>\n<p>Advertising continues to shift to digital, and according to eMarketer, online advertising will account for approximately 64% of total advertising by 2024. This makes sense considering that it is much more direct advertising and reaches the consumer better than traditional media (TV, radio).</p>\n<p><img src=\"https://static.tigerbbs.com/5af8cc7425a991f2e6d6e94f71d29fbd\" tg-width=\"568\" tg-height=\"354\" referrerpolicy=\"no-referrer\">Amazon within digital advertising is the greenest, in earlier stages while Google and Facebook are already much more mature advertising platforms.</p>\n<p>It is undoubtedly effective advertising, do we have doubts that it is a boost in sales to appear at the top of the most important Marketplace in the world? We certainly do not. We believe that it is a part of income that makes a lot of sense and will grow exponentially. The structure of Amazon searches is usually as follows:</p>\n<p><img src=\"https://static.tigerbbs.com/18aa88ac767b673ccddb587eb8bc7d01\" tg-width=\"623\" tg-height=\"458\" referrerpolicy=\"no-referrer\"></p>\n<p><b>Amazon Healthcare</b></p>\n<p>Although you find little more than a footnote about the Healthcare part of the business in Amazon's accounts, Amazon and TAM's plans for this segment are very strong. In November 2020Amazon Carewas approved in WA and will be present in 50 states by the summer and enable the distribution of prescription drugs, opening up a range for exciting new revenues.</p>\n<p>Amazon Care is Amazon's online clinic, which is expanding staff from the end of 2020. Amazon care launches as an internal trial (many Amazon divisions are born this way) in autumn 2019, offering a virtual medical clinic to employees to facilitate access to high-quality primary care online (although home visits are available in some areas). This initiative makes perfect sense in the United States, where healthcare is not universal and health insurance is expensive.</p>\n<p>With Amazon Care you also have urgent care through its application; the services offered by the application are:</p>\n<ul>\n <li>Make an appointment</li>\n <li>In-person follow-up care (select states only)</li>\n <li>Medical examinations</li>\n <li>24/7 service team, 365 days a year.</li>\n <li>Recipes delivered to your home.</li>\n <li>Vaccines.</li>\n <li>Virtual consultation.</li>\n</ul>\n<p>Within the application itself you have Care Chat, a chat that allows you to connect with registered nurses to get advice on health problems.</p>\n<p>Amazon intends to offer this service to independent companies seeking to provide this service for their employees and families. This segment will take time and where it is necessary to have a long-term vision, although the potential is certainly high.</p>\n<p>Amazon is interested not only in the pharmacy business, a B2C business but also in the B2B segment of medical device distribution, which would save a lot of paperwork for hospitals as it is a more direct distribution agreement that could save administrative procedures such as GPOs.</p>\n<p>Concerning the pharmacy side, it is clear that Amazon fits mostly into the hybrid physical plus online presence, emphasizing the online side.</p>\n<p>The combination of Whole Foods + Amazon and Prime Now is powerful for this approach and Amazon already distributes many pharma products. However, I expect a substantial increase and greater efficiency (in terms of delivery times in Europe) in adding new products to the platform.</p>\n<p>It is clear that Amazon is interested in the points mentioned above and this is reflected in its chronological evolution:</p>\n<ul>\n <li>In 2018 Amazon launches its own brand: Basic Care.</li>\n <li>In 2018 it acquired an online pharmacy: PillPack, which operates with a digital license in 49 states covering 90% of American households.</li>\n <li>Late 2018 reported talks with startup Xealth and the hospital network to allow doctors to purchase medical devices.</li>\n <li>Reported in 2018 negotiations to buy MedPlus a company with 1,400 pharmacy outlets in India.</li>\n <li>September 2019 launches Amazon Care.</li>\n <li>B2B growth has been more than x10 since 2016.</li>\n <li>March 2021 national expansion of Amazon Care to begin in the summer of 2021.</li>\n <li>Launch of Amazon Pharmacy in 2020.</li>\n</ul>\n<p>Selling pharmacy products with the Whole Foods combination allows for 2-hour delivery in the USA, which is very interesting thanks to Amazon's logistical features.</p>\n<p>Amazon has been taking steps in this direction for a few years and the most complicated part, which is to establish the infrastructure, is already more than done. Right now, Amazon can sell in the U.S. both online and via \"mail,\" the two most widely used, so its entry into this segment is already complete:</p>\n<p>The final launch ofAmazon Pharmacycame in November 2020 through which prescription drugs will be available. It is currently approved in 45 states which means covering 90% of the American population. Amazon Pharmacy has a proposal to save 80% on generic and 40% on brand-name drugs when you do not pay with insurance and compare the price you get on Amazon with that of another possible distributor.</p>\n<p>For any user who does not have insurance, currently, the prices offered by Amazon are the lowest. Those Prime users on Prime RX will receive discounts between 40-80% with deliveries of less than 2 days (free delivery).</p>\n<p>The Amazon Pharmacy market is gigantic; we are talking about a market that moves more than $350b a year where two-thirds are distributed in retail and one-third via mail. Amazon is already able to reach the retail market and is working on reaching the mail order part, as this is a different market that usually works for chronic ailment drugs on autopilot.</p>\n<p>An important point provided by Amazon Pharmacy is the collection of user data. As an online registry, you have the data of the profile of medicines that a certain person consumes, so this information is precious for certain players.</p>\n<p>There are currently three Amazon pharmacy services:</p>\n<ol>\n <li><b>Amazon Pharmacy:</b>allows customers to order prescription drugs for home delivery. Orders are delivered in discreet packaging to the customer's preferred address. Medications require a prescription from a licensed health care provider.</li>\n</ol>\n<ol>\n <li><b>PillPack by Amazon Pharmacy:</b>part of Amazon Pharmacy and remains a distinct service for customers taking multiple medications daily for chronic conditions.</li>\n</ol>\n<ol>\n <li><b>Amazon Prime:</b>Offers Prime members access to low prices on many brand names and generic prescription drugs when paying without insurance. It can be used to get discounts of up to 80% on generic drugs and 40% on brand-name drugs at more than 50,000 participating pharmacies nationwide, including Amazon Pharmacy and the PillPack by Amazon Pharmacy service.</li>\n</ol>\n<p>Understanding where Amazon is positioned, the opportunity is enormous:</p>\n<ul>\n <li>Retail sale of medicines</li>\n <li>B2B sales of medical devices</li>\n <li>Online medical care.</li>\n</ul>\n<p><b>Gaming and Twitch</b></p>\n<p>Amazon has made several 2014 acquisitions related to gaming; the chronology would be as follows:</p>\n<ol>\n <li>In 2014 Amazon acquires Doublé Helix Games.</li>\n <li>Also in 2014, Amazon acquired Twitch.</li>\n <li>In 2016 it launched a tool: Lumberyard that enables game development.</li>\n <li>In 2016, it acquired the online gaming portal \"Curse.\"</li>\n <li>2018 acquires GameSparks.</li>\n</ol>\n<p>Of all the acquisitions made, absolute reality is twitch, achieving spectacular user and viewing metrics and wild growth.</p>\n<p>The future lies in the cloud and subscriptions, as well as in in-game purchases. Console and game sales have been flat for a few years or with fragile growth, and it is the subscription, cloud and multiplayer, and in-game purchases that have been growing.</p>\n<p>In the future, it is foreseeable that this trend will accelerate with cloud gaming being the clear dominator and console sales declining at high rates, so positioning in this segment will be key to absorb sales in the form of subscription: PlayStation Now, GeForce Now, Stadia.</p>\n<p>Distribution has already changed a lot but from now on the changes are expected to intensify. In the past, the Publisher published the game on the platform or console and the platform or console delivered it to the consumer.</p>\n<p>The new distribution will start from the cloud so that the relationship will start from Azure, AWS or the corresponding player. The broadband provider will come into play and finally, the corresponding cloud platform (Stadia, PlayStation Now...). In this part, there will clearly be a strong growth and where everything remains to be done and positioned.</p>\n<p><b>Music and Video</b></p>\n<p>The $8.45 billion acquisition of Metro Goldwyn Mayer(NYSE:MGM)is significant for Amazon, the company's second-largest acquisition after the $13.7 billion Whole Foods deal in 2017, but representing just half of 1% of AMZN's market capitalization.</p>\n<p>Through the acquisition, AMZN gains access to MGM's extensive library of more than 4,000 films, including notable franchises such as James Bond, Rocky and Tomb Raider. AMZN also acquires 17,000 television programs, including series (Fargo, The Handmaid's Tale) and shows (Shark Tank, The Voice).</p>\n<p>MGM accumulates more than 180 Academy Awards and 100 Emmys. Overall, the MGM deal should allow Amazon to create a more compelling Video offering to attract new subscribers for the Prime ecosystem. The great advantage of streaming and Prime subscription is that it is a business of scale where MGM's acquisition costs are diluted the broader the user base, which is enhanced by this acquisition.</p>\n<p>With 175M users on Prime video and 200 on Prime, this acquisition will possibly catalyze to create new subscribers.</p>\n<p>MGM's content is important and the intellectual property acquired by Amazon, which will allow it to produce more original and exclusive content, which will allow it to compete in a more relevant way with Netflix and Disney.</p>\n<p>We do not rule out that there may be more acquisitions on the video side. The larger the subscriber base, the higher the acquisition costs are diluted over a higher base, positively feeding back into the Prime ecosystem.</p>\n<p>As for the price, it is clear that it has not been a cheap purchase, although the important thing is what its integration means more than what MGM currently generates. We are talking about 25x EBITDA, which is in the highest range of M&amp;A in the average sector. It is understandable considering the current valuations in the markets; of course these have not helped the price to be \"cheap.\" From a broad point of view the integration makes sense in the ecosystem that Amazon is trying to create with Prime.</p>\n<p>When it comes to integrating MGM into Amazon, an important question arises: Is Amazon going to do without the 60% of MGM's revenue generated from content licensing? Is it not going to do without it?</p>\n<p>In the first case, it would become exclusive content of Amazon, generating more value for Amazon Video; in the second case it would not contribute much value to Amazon Video considering that it would not be exclusive content.</p>\n<p><b>Venture Capital</b></p>\n<p>Amazon allocates a small part of its cash to investments in startups and although it is not transparent about this, we do know the intentions of these investments.</p>\n<p>The Amazon Alexa Fund (200M) has a focus on integrating health issues into the home by investing in startups such as Aiva (a virtual assistant that connects seniors with their healthcare service), Tonal (artificial intelligence for home fitness) and Zwift (a virtual cycling app).</p>\n<p>It has recently launched another fund that will invest in Indian startups, mostly related to Healthcare fabrics.</p>\n<p><b>Risks</b></p>\n<ul>\n <li>Covering too many different products or markets: The bets on Amazon Music, Amazon Video and the like, at the moment do not have too much of a view to succeed. Amazon's purpose indeed is to offer an attractive package, not the product separately.</li>\n <li>Bezos' departure should not affect too much considering the company's size, but it is clear that he has been a key figure in Amazon's evolution.</li>\n <li>Regulation. A company of Amazon's size will always face regulatory risks.</li>\n <li>A slowdown in AWS is currently driving operating profit.</li>\n <li>That all the optionality of new business lines does not end up fitting.</li>\n</ul>\n<p>Waymo, although it may not seem like it, is a threat to Amazon. The number of miles traveled by Waymo is increasing and its development is becoming more mature.</p>\n<p>Google with its powerful search engine could create an interesting combination with the shopping part in which you buy through Google, the retailers have the inventory and the logistics are Waymo itself delivering the product autonomously in a short period of time:</p>\n<p><img src=\"https://static.tigerbbs.com/495a0f59e25265e21fd12b548f93b3f1\" tg-width=\"640\" tg-height=\"167\">Amazon has been working for years on drone delivery and making deliveries increasingly efficient, so it has been protecting itself from this potential latent risk for years.</p>\n<p>In the end Amazon wants the process to be as follows:</p>\n<p><img src=\"https://static.tigerbbs.com/9b304d1db1ca34a56deecd34a2e89a2c\" tg-width=\"613\" tg-height=\"344\"><b>Working Capital</b></p>\n<p>To understand Amazon's FCF, it is important to talk about Amazon's working capital changes, as these are very peculiar. The first quarter is always very negative, penalizing the CFO. The following quarters the Working Capital changes neutralize the effect of the first quarter, bringing cash flow to Amazon. This happens mainly because at the end of the year there are many pending payments to suppliers and expenses to be settled, so that at the beginning of the year when these accounts are settled, the changes in working capital are very negative, hurting Amazon's operating cash flow.</p>\n<p><b>Profitability</b></p>\n<p>Amazon's profitability has varied substantially as they have started investing aggressively in the business and growing their assets and capital employed considerably. We are talking about an 80-fold increase in assets since 2006, which reflects the lines I have previously discussed.</p>\n<p>As margins are expanding, the path of improving return on assets and capital employed has returned, with ROCE currently at 20%, ROE at 23% and ROA at 7%. Undoubtedly, these are levels that indicate that Amazon is a quality company. As a note, Amazon is in a period of intensive investments and with a clear potential for margin expansion in the future, so it would be foreseeable that these metrics will continue to rise.</p>\n<p><img src=\"https://static.tigerbbs.com/9b00f1639fd6bc917998f038f3ff60ec\" tg-width=\"597\" tg-height=\"335\"></p>\n<p><b>Valuation</b></p>\n<p>Amazon is a complicated company to value because of its size and the point at which it finds itself; large investments and very high margin expansion potential.</p>\n<p>It currently trades at around 60x EV/FCF. Still, if we normalize both Working Capital and Capex (it has increased from 5% of sales to 9%), we would be talking about 35x EV/FCF for a company with very high quality and with most of the divisions only scratching the surface of their potential.</p>\n<p>Just by looking at the multiples, we could already say that it is reasonable considering the prospects and position of the business.</p>\n<p>It currently trades at about 36x EV/FCF, below its average EV/FCF multiple considering a normalized WC and normalized CAPEX. This already gives us an idea that it can be a company to consider as Amazon today is a much stronger business than 10 years ago.</p>\n<p><img src=\"https://static.tigerbbs.com/0d462cfa442b191e5e27213180f5ad9b\" tg-width=\"556\" tg-height=\"336\">If we project sales and FCF assuming conservative assumptions and normalizing both Cash Flow and Working Capital we obtain the following estimates:</p>\n<p><img src=\"https://static.tigerbbs.com/8546c6d09613082ad5d6e1fdef607bea\" tg-width=\"640\" tg-height=\"214\">Under these assumptions, we performed a valuation by multiples and DCF:</p>\n<p><img src=\"https://static.tigerbbs.com/2d0e31590998b2af7f9f7209db841f59\" tg-width=\"251\" tg-height=\"410\">We would be buying Amazon at a reasonable price without assuming that any of the above optionalities explode, so the margin of safety is wide even though the upside is tight.</p>\n<p><b>Conclusion</b></p>\n<p>Amazon is a company that is reaping the rewards after decades of sowing. These are the years where surprises start to emerge, margins start to expand, and more optionality starts appearing. Having the opportunity to acquire a company of this quality at a \"reasonable\" price is one of those opportunities, from a profitability-risk point of view, that in the long term make the difference.</p>\n<p>It is important to closely follow the evolution of the different segments and the optionality associated with them and the ARPUS of the international segment since it is the one with the greatest potential.</p>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Amazon: A No-Brainer For The Next 10 Years</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nAmazon: A No-Brainer For The Next 10 Years\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-06-09 23:38 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4433845-amazon-stock-amzn-no-brainer-for-the-next-10-years><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nAmazon maintains high advertising potential.\nThe recent approval of Amazon Pharmacy provides a huge TAM.\nThe company has an interesting future operating leverage due to high capex deployed in...</p>\n\n<a href=\"https://seekingalpha.com/article/4433845-amazon-stock-amzn-no-brainer-for-the-next-10-years\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"AMZN":"亚马逊"},"source_url":"https://seekingalpha.com/article/4433845-amazon-stock-amzn-no-brainer-for-the-next-10-years","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1127823989","content_text":"Summary\n\nAmazon maintains high advertising potential.\nThe recent approval of Amazon Pharmacy provides a huge TAM.\nThe company has an interesting future operating leverage due to high capex deployed in logistics.\n\nInvestment Thesis\nAmazon(NASDAQ:AMZN)is one of the best-known companies in the world, it seems difficult to discover something new in it but the reality is that there is a lot to discover. After performing this in-depth analysis of Amazon, I have realized that most segments are in their early stages. The current valuation is very attractive considering that they are just scratching the surface of the potential of these divisions.\nAmazon Healthcare has a huge TAM through Amazon Pharmacy and Amazon Care (telemedicine). Both divisions are newly approved, so as of today, they contribute virtually nothing to Amazon's bottom line.\nThe retail part has a long way to go, with a lot of room for growth with its omnichannel for supermarkets, increases in ARPU, FBA.\nOn the other hand, digital advertising is eating the world, and Amazon has recently been getting into it (since 2015). Part of Amazon's advertising five years ago was generating hardly any profit, now it is doubling revenues every two years and this has just begun. Amazon is the most powerful product marketplace globally, so it makes perfect sense that the wild growth in advertising continues to grow at high rates.\nWe still have the optionality in gaming, the growth in prime ARPUs, the Audio and Video division, in short, numerous segments that have not yet started to contribute sales and Amazon is currently trading at about 35x normalized FCF, expensive? In our opinion considerably cheaper than the multiples at which the market is trading.\nProduct\nAmazon is a company that has always had a long-term focus. This means that since its inception, it has renounced short-term profitability to become one of the most important companies in the world in the long term. There is no doubt that it has achieved this goal and we are right at the moment where Amazon is beginning to reap what has been sown for so many years.\nIn its early days, Amazon focused on the user experience when shopping online. Amazon offered a simple, accessible and universal way to buy products to guarantee the highest number of reviews and arrive in record time. In addition, acquiring a product on Amazon carries the guarantee of delivery of the same; this means that if you have any kind of problem with the reception of the product, Amazon solves it in record time.\nThis first phase has been very successful and has been the foundation of Amazon 2.0, which has been integrating more and more services and improving its original product: e-commerce. This image summarizes very well the evolution of Amazon from a Prime 1.0 to a Prime with a much higher added value.\nThanks to this user experience created by Amazon, it has been one of the main contributors (or rather the main contributor) to the explosive evolution of e-commerce, making its penetration increasingly higher and its growth very high.\nAccording toStatistadata, e-commerce penetration worldwide is 50.8% in 2021 and is expected to reach 63.1% in 2025. Average spending per person exceeds $700 per year. Between 2020 and 2025, e-commerce revenues are expected to grow by 50%, so far from being a mature market, it is still growing strongly.\nAmazon Prime\nWe all know what this service entails, so I am not going to explain it at length. More and more new services are being integrated into Amazon Prime, making it one of the must-have subscriptions for users.\nA chronological summary of Amazon's evolution in the US (its most mature market) is essential to understand the evolution of prices and value-added over time.\nAmazonlaunches Prime subscription in the US in 2005for $79 per year. In 2006, Amazon moved forward and launched Fulfilled by Amazon. This service allows sellers to have a store on Amazon and ship their products for a fee. These products then become eligible for Amazon Prime, increasing the assortment and selection available to customers.\nStarting in 2011, Amazon included Prime Video in subscriptions, which meant 5,000 movies and series for every subscriber.\n2014 was a great year for Prime, not only because there were many new services added, but also because there was the first price increase, Amazon raises from $79 to $99 the subscription in the U.S. This same year Amazon Prime Pantry is launched, offering customers the ability to buy essential supermarket products (toilet paper, drinks, creams) for a meager fee and regularly. Also in 2014, Amazon Music was launched with the Prime subscription, giving access to a catalog of 60M songs, on a par with the best streaming services. Amazon photos are also launched, a service that offers high-resolution photo storage with Amazon's own subscription. Finally, Amazon launches; Amazon Now, a supermarket service in which you receive your products in 2 hours (or one in certain areas) with free shipping cost from $ 50.\nIn 2015 Amazon Prime Day was created to celebrate the 20th anniversary, in which 24 hours offers to appear to be the day of Amazon's biggest sale since its launch.\nIn 2016, same-day delivery to 27 metropolitan areas was introduced. Prime also joins Prime, Prime Reading, which offered more than 1,000 books and magazines free of charge.\nIn 2017, an agreement was formed with Chase to create a credit card that offers Prime subscribers at no added cost a 5% cash back at Amazon or Whole Foods for purchases made. Prime Wardrobe is also launched in 2017, a service that allows you to try on clothes, jewelry or similar in a period of 7 days before having to pay. That same year Amazon Key is launched, a smart lock that allows opening the home from the Smartphone to trusted people (seeing through an integrated camera), open the door from your own Smartphone or with a personal code. In addition to this, it allows Prime members to receive Amazon packages in their garage, house, without needing a key, simply through the APP.\nIn 2017, the acquisition of Whole Foods was made, which is integrated into Amazon with discounts, free shipping or cashback when paying by card.\nIn 2018 comes a second price increase from $99 to the current $119, an increase of $40 since its launch in 2005.\nIn 2019, Amazon Fresh launched Prime subscribers, offering free in select cities fresh grocery delivery service.\nFinally, in 2020 Amazon Prime Gaming is launched, a service built into the Prime subscription that provides free games, exclusive gaming content and a free Twitch subscription.\nThe evolution of Prime has been impressive, incorporating new services year after year to make Amazon's subscription indispensable in our lives. Seeing the evolution in subscribers, it seems evident that it has achieved its purpose.\nPrime's evolution has taken us to200M subscribers in 2020globally of which 153M are from the US.\nSource: Emarketer, Statista\nGiven the penetration, Prime's growth has slowed down in recent years, although users are becoming more and more accustomed to the service and it is becoming one of the essential subscriptions. This in our opinion, will lead to pricing power, something we have already seen in the United States, where the price for the subscription is substantially higher than the international subscription.\nBelow is a comparison of subscription costs in different countries:\nPrices have risen compared to2018(these are as of year-end 2020). It is expected that prices will continue to rise gradually to generate higher earnings per user (ARPU).\nThe first thing we notice is that the disparity between countries is high. In my opinion, where there is more room for prices to converge is in Europe, as Prime becomes more mature and incorporates higher quality content (as it has done in the US). This table shows that there is still a long way to go in terms of ARPU. Even in the US the price of an Amazon Prime subscription, taking into account everything included (music, video, access to Pharmacy, free shipping, storage), is well below other comparable subscriptions.\nPenetration in the United States is at its highest, 77% of people who buy on Amazon are Prime users. In 2020 this percentage was 67% so we have substantial growth; in fact it is one of the highest growth rates in the last decade.\nThe Prime user is more profitable since he/she tends to spend 2-3 times more per month than a non-Prime user. In e-commerce, Amazon is the clear dominator with amarket sharein the United States of more than 50%. Being the clear dominator in a market thatwill grow at double digitsfor the next 5 years (probably also for the next 10 years) is undoubtedly very interesting. Another important point is that retail is a huge market where Amazon is just scratching the surface but has certainly positioned itself to capture more and more market share as the years go by. Amazon has only9% ofUS retail sales, while Walmart has 9.5%. To give you a sense of Amazon's traction, in 2019 it only had 6.8%. Although it is clear that COVID has helped it gain traction, over the years it has always been gaining more market share. Amazon knows this and is substantially increasing fulfillment CAPEX.\nThe maturity of the Prime subscriber is also something important. As the years go by the Prime subscriber tends to consume more, so we could say that even a Prime subscriber has a rump-up period as we can see in this graph:\nIn certain markets such as India, where Amazon has focused a lot of attention and investment, Prime membership growth has been exceptional. According to the head of Prime in the country, Prime membership has doubled between 4Q17 and 2Q19. While some of that growth may have been driven by Amazon's material investment in local digital content and Prime rate incentives, we believe many of these members will become more engaged retail customers as their financial situation improves over time.\nThere are doubts about whether the momentum resulting from COVID in e-commerce will slow down with the reopening of e-commerce. Data from the first quarter of 2021 (with a reasonable reopening) shows that far from slowing down, growth has even accelerated above pre-COVID levels. This makes sense as certain users are reluctant to shop online and have been relatively forced during the quarantine. Having made purchases online has allowed them to lose that fear and become e-commerce users that would have taken longer to become so had it not been for COVID.\nCurrently, 66% of GMVs (Gross Merchandise Value or total amount transacted in resales without discounts) come from the United States, the most mature market. In the future, the projection is that the mix of GMVs between US and Non-US will converge to 50% since it is in the rest of the markets where growth is currently highest.\nMarket penetration is gradual and to get an idea of how it is evolving; we must look at the most mature market: the United States.\nCurrently, 67% of U.S. households with internet have a Prime subscription.\nFulfillment by Amazon (FBA)\nMore than half of the units purchased on Amazon's global marketplaces are sold by third-party merchants: sellers large and small who benefit from having access to Amazon's millions of customers. Your Seller Care business enables you to offer a wide selection of products by engaging these sellers and helping them manage their business on the platform.\nFulfillment by Amazon (FBA) is a program that allows sellers to ship their inventory to Amazon's distribution centers, where they create, pack and ship orders for them, as well as handle customer service and returns for them. Their products become part of the Prime program, so they reach an even larger audience, and the seller spends fewer resources on inventory management and shipping.\nFBA started in 2005 with just a handful of vendors. Teams of business and technical professionals build all the systems that enable it, including tools that provide real-time data and reports and allow companies to manage their inventories remotely and from any device.\nThe fulfillment part benefits from operational leverage, managing to contain unit costs and generating a higher and higher free cash flow. To understand the service in greater depth, we can look at Amazon's FBA service fees to third parties, which occupy almost 50% of the GMVs.\nAmazon has been investing in its fulfillment network for many years, reinforcing its increasingly evident MOAT regarding logistics capacity and customer experience. So high has been the deployment of Capex that today it even rivals companies whose core business is precisely that:\nSource: Annual report, FactSet estimates\nWith the scale that Amazon has acquired, it would not be unreasonable to become a more efficient logistics platform than even pure competitors.\nThe graph shows how the simplest route an order can take is directly from the seller to the buyer through a third-party service, where Amazon never actually touches the product, only puts the Marketplace.\nFor orders that do go through Amazon's network, the company groups inventory into three different categories:\n\nSmall classifiable: consumer items that make up the majority of the business. These are everyday items such as books, video games, and small-weight items.\nLarge sortable: Items with a higher weight may require more manual systems due to their size.\nLarge unsortable: Items that due to their size or weight, are handled with less automation, often in different locations and require more specialization for their preparation, such as specific packaging. Most of these shipments are delivered by third parties, mostly XPO.\n\nSmall and large collection and packaging facilities are usually located in the same building but separate divisions.\nA key defining characteristic of small and large sortable items is that they can fit into a box placed on a conveyor belt for automatic sorting.\nIntuitively, small sortable items are also where the company has implemented the most automation, including robotic picking functionality.\n2013 was a turning point for FBA. We are talking about the 1,050 fulfillment network points today; only 58 were open before 2014, or 5%. Before 2014 there were no airports; there was hardly any infrastructure compared to today. 2020 is once again a turning point; 45% of fulfillment centers have been or will be built after 2020.\nThis has undoubtedly been reflected in the 2020 CAPEX, which has risen considerably compared to previous years, from 5% to 9%. Excluding the increase in 2020 CAPEX, annualized growth since 2013 is 37%, above sales growth. Not all of this growth is due to fulfillment. Still, reading the letters from management, it is clear that a large part of this growth comes from this division, saying that the costs associated with \"last mile delivery\" had increased substantially.\nThis Capex is reflected in the evolution of the square meters of fulfillment:\nGrowth in line with all of the above.\nAmazon is also increasing its aircraft fleet, which started in 2016 following the agreement with ATSG and Atlas Air to lease 40 aircraft (20+20). Currently, the fleet of aircraft under lease is 82 plus 11 owned aircraft, a total of 93, so it has more than doubled the fleet in less than 5 years. These movements make clear Amazon's intentions to boost the air service. If it continues simultaneously, we would have about 200 aircraft in 2016 between leasing and ownership.\nIn the following image, we can see Amazon's air gateway network, with its usual spans. The network represents a key piece of the company's proprietary distribution network that has not been replicated by any other retailer and is a key function that allows Amazon to operate without the networks of third-party carriers.\nSource: Chaddick Institute\nIn Europe, it also has a network in the main capitals: Madrid, Barcelona, Paris, Milan, Rome, Cologne and Leipzig.\nThe current gap in the fleet is significant concerning UPS and FedEx, but Capex is deploying Amazon would not be surprised to have a similar fleet by 2030.\nAnd all this for what? Considering how much Amazon is spending on logistics, it's clear it has a purpose. FBA sales went from $1b in 2011 to $40b in 2020, a significant jump. Rumors indicate that Amazon would like to start competing with UPS and FedEx in offering their services not only for its Marketplace but also for third parties. This may be indicative of the program launched in 2017 \"Seller Flex) which is a variant of the FBA program but in-house. This means that you can leverage Amazon's logistics tools without having to deposit inventory in Amazon's fulfillment centers. This is already a very similar service to that provided by pure shipping players.\nFollowing the launch of FBA Onsite, Amazon began internal testing of Amazon Shipping, a third-party shipping service that complemented FBA onsite. Early on reports suggested that Amazon would be able to undercut third-party carriers by leveraging the capacity it already used for its own deliveries and eliminating added costs. After more than two years, Amazon Shipping remains an internal trial put on hold by the arrival of COVID, as Amazon itself needed all of its logistics capacity for internal use.\nIs there really an opportunity here? Let's look at the sales and operating profit of the main players: UPS and FedEx.\nBetween them they generate 40% of Amazon's sales and 53% of operating profit. Obviously, Amazon will not capture all the business from both, but it gives us an idea that it is a large market that can provide incremental sales for Amazon.\nConsidering all the opportunities on the table: Pharmacy, Grocery, Gaming, Advertising) Amazon Shipping will likely be delayed for a while, not one of the most immediate priorities. The deployed Capex itself serves for internal use with much more intense value chain control.\nWe can really see the benefits of that CAPEX for fulfillment in the gross margin. The cost of sales is associated with Amazon's shipping costs, both in-house and through third parties. As in-house shipping has been gaining scale through CAPEX deployment, the gross margin has been increasing, and this is entirely normal given that this segment is pure volume. This means that a company that does not move Amazon's volume will not be compensated for the Capex deployed by Amazon. Still, on the other hand, a company like Amazon that increases the number of shipments in double digits year after year shows that the higher the volume, the higher the cost savings per shipment that the CAPEX deployed will compensate. This is a key point, as Amazon has a greater weight in own shipping and less in third parties, it will acquire a higher gross margin because the cost of own shipping is significantly lower than using a third party such as UPS or FedEx.\nAWS\nWe believe that AWS will continue to be the dominant player in IaaS/PaaS as it captures most of the future growth in the industry due to its huge customer base.\nThere should be plenty of growth opportunities for all three vendors. Gartner's forecast for IaaS and PaaS implies a 25% revenue CAGR between 2020 and 2023 and a market of nearly $200 billion by 2023.\nAs for margins, they have danced between 20-30% despite aggressive pricing plans with a total of 20 discounts between 2018 and 2020 and so far 1 in 2021. The drop in margins in 2019 was due to an increase in investments for sales and marketing issues, which was only a short-term issue.\nAmazon is the clear dominator in the cloud market and although it has lost market share in recent years, this has not prevented it from growing at very high rates. What's interesting? The expectation is that thecloud marketwill grow from 2020 to 2025 at a compound rate of 17.5%. Considering that it is currently the company's division with the best margins, this is great news for Amazon's future.\nAmazon'sbacklogis accelerating its growth; we talk about the last year has grown more than 50% YoY while AWS sales growth is more in line with 30%. The backlog is contracts with an average maturity period of 3 years that end up materializing in sales, so seeing the rate at which it is growing is certainly very interesting.\nBacklog contracts are usually with large companies to whom they make offers with consequent price cuts. AWS is being aggressive but can afford to be given the margins it operates on.\nThe backlog currently exceeds $50b, which should materialize over an average period of 3 years. This will be AWS sales but does not mean that these are the only sales that will materialize as there will continue to be growth in shorter-term contracts as at present.\nSource: Annual Report & Morgan Stanley Estimates\nThis graph shows exciting data. As I mentioned, the backlog has accelerated its growth while sales per se have been maintained (the last quarters). In the medium term, both curves will tend to converge.\nSupermarket\nThe supermarket sector is gigantic and today, Amazon's US market share in this segment is less than 3% of 2020 sales. Considering that Amazon's penetration in this segment is increasingly higher and that Amazon is learning more and more due to the integration of Whole Foods and the opening of Fresh, Go stores and above all, physical locations.\nThe opening of the first Amazon Fresh store in California is very recent; we are talking about September 2020 and from that date until May 2020 the number has risen to 12. Considering the pace of openings, it is clear that Amazon wants to focus on an Omnichannel model where you can buy physically or online, whichever best suits your needs at any given time.\nAmazon stores average 35,000 feet in size, selling about $754 per foot, in line with comparables such as (Wegmans, Kroger, Ahold) so the pace of Amazon's store rollout will mean interesting incremental sales (depending on the number of stores)\nOn the other hand Amazon is focusing on the consumer experience.Amazon Dash Cartis turning the shopping experience into something totally different. It will have a small initial learning curve for the consumer, but it substantially improves the supermarket shopping experience once the concept is understood. We are talking about a supermarket cart with intelligence to account for every product you put inside automatically. You can leave with the purchase without having to go through the checkout or similar, and to all this add, it lets you know how much you have spent at each moment, making the experience much more efficient.\nTherefore Amazon offers an omnichannel experience in which you can buy online and receive same-day delivery for free (on orders over $50 for prime users). You can also place the order and pick it up at the store or simply buy it in the store itself; let's say it's a similar approach to Inditex.\nHaving the ability to do click & collect or simply order to home delivery allows stores to leverage stores in various ways that will generate operational leverage and increased margins as order volumes increase.\nThe current trend is towards healthy food and in Amazon Fresh Stores, there is ample space for fresh and prepared food; we have space for fresh seafood, a sushi bar or even fresh pizza in the supermarket itself.\nReviews of the Amazon Fresh stores on google are very positive, with an average of 4.3 stars across all 12 locations and over 3,000 votes.\nIn a survey conducted by UBS in its 7th annual eCommerce survey, all respondents were asked the main reasons for buying online. With 43% of the answers, the most chosen was the convenience and comfort of doing it. It was a key point for the penetration to continue increasing since it is not because of something temporary such as prices, greater selection, but because of something structural.\nOn the opposite side, reasons for not buying online would be in the first position with 45% \"I prefer to see and touch the product.\" Another main reason is that it is easier to buy physically and this can be key, making online shopping more accessible with improvements to the process itself.\nTo get an idea of how the Amazon Groceries process works we have the following scheme:\nLooking at the schematic, it is easy to understand how Whole Foods fits into the process. Having incorporated physical stores, they serve as a logistics hub for shipments, allowing Amazon to improve efficiency.\nIn addition to being focused on all the aspects mentioned above, Amazon has also been concerned about generating its own brand, where margins are higher. An example of Amazon's own brands can be seen below.\nEspecially in the last few years (since 2017), Amazon's own brand has been significantly boosted. We talked about that in 2017 there were less than 20 Amazon own brands and very few products for sale. Currently, it has more than 120 own brands and 22,617 available. In addition, Amazon's own brand has an average of 4.3 stars reflecting consumer satisfaction levels.\nAmazon Ads\nThis is one of the biggest surprises and most undervalued assets that Amazon currently has. Advertising revenue is a source of income that is growing at an accelerated rate; we are talking about the fact that only 5 years ago, it was non-existent and now it is doubling every two years:\nThis evolution makes sense, considering that Amazon is the most powerful showcase globally to sell products, so being able to appear in the top positions is undoubtedly something very interesting for products. We are talking about a gigantic market where Amazon is just scratching the surface.\nConsidering the advertising spending of listed defensive consumer companies, we can get an idea of the size of this market, where Amazon has not yet monetized practically anything. Proof of the potential is simply to look at the growth in sales over the last few years, which gives us an idea of what is behind this market.\nAdvertising continues to shift to digital, and according to eMarketer, online advertising will account for approximately 64% of total advertising by 2024. This makes sense considering that it is much more direct advertising and reaches the consumer better than traditional media (TV, radio).\nAmazon within digital advertising is the greenest, in earlier stages while Google and Facebook are already much more mature advertising platforms.\nIt is undoubtedly effective advertising, do we have doubts that it is a boost in sales to appear at the top of the most important Marketplace in the world? We certainly do not. We believe that it is a part of income that makes a lot of sense and will grow exponentially. The structure of Amazon searches is usually as follows:\n\nAmazon Healthcare\nAlthough you find little more than a footnote about the Healthcare part of the business in Amazon's accounts, Amazon and TAM's plans for this segment are very strong. In November 2020Amazon Carewas approved in WA and will be present in 50 states by the summer and enable the distribution of prescription drugs, opening up a range for exciting new revenues.\nAmazon Care is Amazon's online clinic, which is expanding staff from the end of 2020. Amazon care launches as an internal trial (many Amazon divisions are born this way) in autumn 2019, offering a virtual medical clinic to employees to facilitate access to high-quality primary care online (although home visits are available in some areas). This initiative makes perfect sense in the United States, where healthcare is not universal and health insurance is expensive.\nWith Amazon Care you also have urgent care through its application; the services offered by the application are:\n\nMake an appointment\nIn-person follow-up care (select states only)\nMedical examinations\n24/7 service team, 365 days a year.\nRecipes delivered to your home.\nVaccines.\nVirtual consultation.\n\nWithin the application itself you have Care Chat, a chat that allows you to connect with registered nurses to get advice on health problems.\nAmazon intends to offer this service to independent companies seeking to provide this service for their employees and families. This segment will take time and where it is necessary to have a long-term vision, although the potential is certainly high.\nAmazon is interested not only in the pharmacy business, a B2C business but also in the B2B segment of medical device distribution, which would save a lot of paperwork for hospitals as it is a more direct distribution agreement that could save administrative procedures such as GPOs.\nConcerning the pharmacy side, it is clear that Amazon fits mostly into the hybrid physical plus online presence, emphasizing the online side.\nThe combination of Whole Foods + Amazon and Prime Now is powerful for this approach and Amazon already distributes many pharma products. However, I expect a substantial increase and greater efficiency (in terms of delivery times in Europe) in adding new products to the platform.\nIt is clear that Amazon is interested in the points mentioned above and this is reflected in its chronological evolution:\n\nIn 2018 Amazon launches its own brand: Basic Care.\nIn 2018 it acquired an online pharmacy: PillPack, which operates with a digital license in 49 states covering 90% of American households.\nLate 2018 reported talks with startup Xealth and the hospital network to allow doctors to purchase medical devices.\nReported in 2018 negotiations to buy MedPlus a company with 1,400 pharmacy outlets in India.\nSeptember 2019 launches Amazon Care.\nB2B growth has been more than x10 since 2016.\nMarch 2021 national expansion of Amazon Care to begin in the summer of 2021.\nLaunch of Amazon Pharmacy in 2020.\n\nSelling pharmacy products with the Whole Foods combination allows for 2-hour delivery in the USA, which is very interesting thanks to Amazon's logistical features.\nAmazon has been taking steps in this direction for a few years and the most complicated part, which is to establish the infrastructure, is already more than done. Right now, Amazon can sell in the U.S. both online and via \"mail,\" the two most widely used, so its entry into this segment is already complete:\nThe final launch ofAmazon Pharmacycame in November 2020 through which prescription drugs will be available. It is currently approved in 45 states which means covering 90% of the American population. Amazon Pharmacy has a proposal to save 80% on generic and 40% on brand-name drugs when you do not pay with insurance and compare the price you get on Amazon with that of another possible distributor.\nFor any user who does not have insurance, currently, the prices offered by Amazon are the lowest. Those Prime users on Prime RX will receive discounts between 40-80% with deliveries of less than 2 days (free delivery).\nThe Amazon Pharmacy market is gigantic; we are talking about a market that moves more than $350b a year where two-thirds are distributed in retail and one-third via mail. Amazon is already able to reach the retail market and is working on reaching the mail order part, as this is a different market that usually works for chronic ailment drugs on autopilot.\nAn important point provided by Amazon Pharmacy is the collection of user data. As an online registry, you have the data of the profile of medicines that a certain person consumes, so this information is precious for certain players.\nThere are currently three Amazon pharmacy services:\n\nAmazon Pharmacy:allows customers to order prescription drugs for home delivery. Orders are delivered in discreet packaging to the customer's preferred address. Medications require a prescription from a licensed health care provider.\n\n\nPillPack by Amazon Pharmacy:part of Amazon Pharmacy and remains a distinct service for customers taking multiple medications daily for chronic conditions.\n\n\nAmazon Prime:Offers Prime members access to low prices on many brand names and generic prescription drugs when paying without insurance. It can be used to get discounts of up to 80% on generic drugs and 40% on brand-name drugs at more than 50,000 participating pharmacies nationwide, including Amazon Pharmacy and the PillPack by Amazon Pharmacy service.\n\nUnderstanding where Amazon is positioned, the opportunity is enormous:\n\nRetail sale of medicines\nB2B sales of medical devices\nOnline medical care.\n\nGaming and Twitch\nAmazon has made several 2014 acquisitions related to gaming; the chronology would be as follows:\n\nIn 2014 Amazon acquires Doublé Helix Games.\nAlso in 2014, Amazon acquired Twitch.\nIn 2016 it launched a tool: Lumberyard that enables game development.\nIn 2016, it acquired the online gaming portal \"Curse.\"\n2018 acquires GameSparks.\n\nOf all the acquisitions made, absolute reality is twitch, achieving spectacular user and viewing metrics and wild growth.\nThe future lies in the cloud and subscriptions, as well as in in-game purchases. Console and game sales have been flat for a few years or with fragile growth, and it is the subscription, cloud and multiplayer, and in-game purchases that have been growing.\nIn the future, it is foreseeable that this trend will accelerate with cloud gaming being the clear dominator and console sales declining at high rates, so positioning in this segment will be key to absorb sales in the form of subscription: PlayStation Now, GeForce Now, Stadia.\nDistribution has already changed a lot but from now on the changes are expected to intensify. In the past, the Publisher published the game on the platform or console and the platform or console delivered it to the consumer.\nThe new distribution will start from the cloud so that the relationship will start from Azure, AWS or the corresponding player. The broadband provider will come into play and finally, the corresponding cloud platform (Stadia, PlayStation Now...). In this part, there will clearly be a strong growth and where everything remains to be done and positioned.\nMusic and Video\nThe $8.45 billion acquisition of Metro Goldwyn Mayer(NYSE:MGM)is significant for Amazon, the company's second-largest acquisition after the $13.7 billion Whole Foods deal in 2017, but representing just half of 1% of AMZN's market capitalization.\nThrough the acquisition, AMZN gains access to MGM's extensive library of more than 4,000 films, including notable franchises such as James Bond, Rocky and Tomb Raider. AMZN also acquires 17,000 television programs, including series (Fargo, The Handmaid's Tale) and shows (Shark Tank, The Voice).\nMGM accumulates more than 180 Academy Awards and 100 Emmys. Overall, the MGM deal should allow Amazon to create a more compelling Video offering to attract new subscribers for the Prime ecosystem. The great advantage of streaming and Prime subscription is that it is a business of scale where MGM's acquisition costs are diluted the broader the user base, which is enhanced by this acquisition.\nWith 175M users on Prime video and 200 on Prime, this acquisition will possibly catalyze to create new subscribers.\nMGM's content is important and the intellectual property acquired by Amazon, which will allow it to produce more original and exclusive content, which will allow it to compete in a more relevant way with Netflix and Disney.\nWe do not rule out that there may be more acquisitions on the video side. The larger the subscriber base, the higher the acquisition costs are diluted over a higher base, positively feeding back into the Prime ecosystem.\nAs for the price, it is clear that it has not been a cheap purchase, although the important thing is what its integration means more than what MGM currently generates. We are talking about 25x EBITDA, which is in the highest range of M&A in the average sector. It is understandable considering the current valuations in the markets; of course these have not helped the price to be \"cheap.\" From a broad point of view the integration makes sense in the ecosystem that Amazon is trying to create with Prime.\nWhen it comes to integrating MGM into Amazon, an important question arises: Is Amazon going to do without the 60% of MGM's revenue generated from content licensing? Is it not going to do without it?\nIn the first case, it would become exclusive content of Amazon, generating more value for Amazon Video; in the second case it would not contribute much value to Amazon Video considering that it would not be exclusive content.\nVenture Capital\nAmazon allocates a small part of its cash to investments in startups and although it is not transparent about this, we do know the intentions of these investments.\nThe Amazon Alexa Fund (200M) has a focus on integrating health issues into the home by investing in startups such as Aiva (a virtual assistant that connects seniors with their healthcare service), Tonal (artificial intelligence for home fitness) and Zwift (a virtual cycling app).\nIt has recently launched another fund that will invest in Indian startups, mostly related to Healthcare fabrics.\nRisks\n\nCovering too many different products or markets: The bets on Amazon Music, Amazon Video and the like, at the moment do not have too much of a view to succeed. Amazon's purpose indeed is to offer an attractive package, not the product separately.\nBezos' departure should not affect too much considering the company's size, but it is clear that he has been a key figure in Amazon's evolution.\nRegulation. A company of Amazon's size will always face regulatory risks.\nA slowdown in AWS is currently driving operating profit.\nThat all the optionality of new business lines does not end up fitting.\n\nWaymo, although it may not seem like it, is a threat to Amazon. The number of miles traveled by Waymo is increasing and its development is becoming more mature.\nGoogle with its powerful search engine could create an interesting combination with the shopping part in which you buy through Google, the retailers have the inventory and the logistics are Waymo itself delivering the product autonomously in a short period of time:\nAmazon has been working for years on drone delivery and making deliveries increasingly efficient, so it has been protecting itself from this potential latent risk for years.\nIn the end Amazon wants the process to be as follows:\nWorking Capital\nTo understand Amazon's FCF, it is important to talk about Amazon's working capital changes, as these are very peculiar. The first quarter is always very negative, penalizing the CFO. The following quarters the Working Capital changes neutralize the effect of the first quarter, bringing cash flow to Amazon. This happens mainly because at the end of the year there are many pending payments to suppliers and expenses to be settled, so that at the beginning of the year when these accounts are settled, the changes in working capital are very negative, hurting Amazon's operating cash flow.\nProfitability\nAmazon's profitability has varied substantially as they have started investing aggressively in the business and growing their assets and capital employed considerably. We are talking about an 80-fold increase in assets since 2006, which reflects the lines I have previously discussed.\nAs margins are expanding, the path of improving return on assets and capital employed has returned, with ROCE currently at 20%, ROE at 23% and ROA at 7%. Undoubtedly, these are levels that indicate that Amazon is a quality company. As a note, Amazon is in a period of intensive investments and with a clear potential for margin expansion in the future, so it would be foreseeable that these metrics will continue to rise.\n\nValuation\nAmazon is a complicated company to value because of its size and the point at which it finds itself; large investments and very high margin expansion potential.\nIt currently trades at around 60x EV/FCF. Still, if we normalize both Working Capital and Capex (it has increased from 5% of sales to 9%), we would be talking about 35x EV/FCF for a company with very high quality and with most of the divisions only scratching the surface of their potential.\nJust by looking at the multiples, we could already say that it is reasonable considering the prospects and position of the business.\nIt currently trades at about 36x EV/FCF, below its average EV/FCF multiple considering a normalized WC and normalized CAPEX. This already gives us an idea that it can be a company to consider as Amazon today is a much stronger business than 10 years ago.\nIf we project sales and FCF assuming conservative assumptions and normalizing both Cash Flow and Working Capital we obtain the following estimates:\nUnder these assumptions, we performed a valuation by multiples and DCF:\nWe would be buying Amazon at a reasonable price without assuming that any of the above optionalities explode, so the margin of safety is wide even though the upside is tight.\nConclusion\nAmazon is a company that is reaping the rewards after decades of sowing. These are the years where surprises start to emerge, margins start to expand, and more optionality starts appearing. Having the opportunity to acquire a company of this quality at a \"reasonable\" price is one of those opportunities, from a profitability-risk point of view, that in the long term make the difference.\nIt is important to closely follow the evolution of the different segments and the optionality associated with them and the ARPUS of the international segment since it is the one with the greatest potential.","news_type":1},"isVote":1,"tweetType":1,"viewCount":484,"authorTweetTopStatus":1,"verified":2,"comments":[{"author":{"id":"3583109252998837","authorId":"3583109252998837","name":"oddox","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":2,"crmLevelSwitch":0,"idStr":"3583109252998837","authorIdStr":"3583109252998837"},"content":"I want to buy but it's too extensive for me ?","text":"I want to buy but it's too extensive for me ?","html":"I want to buy but it's too extensive for me ?"}],"imageCount":0,"langContent":"EN","totalScore":0},{"id":365932600,"gmtCreate":1614687993600,"gmtModify":1704774023321,"author":{"id":"3574558286837472","authorId":"3574558286837472","name":"Mxtinhzq","avatar":"https://static.tigerbbs.com/c915c3b8303c6bd800f52c911a79390f","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3574558286837472","authorIdStr":"3574558286837472"},"themes":[],"htmlText":"Should have gotten BABA at $220. Nonetheless still undervalue and great stock to keep for the long haul.&nbsp;","listText":"Should have gotten BABA at $220. Nonetheless still undervalue and great stock to keep for the long haul.&nbsp;","text":"Should have gotten BABA at $220. Nonetheless still undervalue and great stock to keep for the long haul.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/365932600","repostId":"1169004570","repostType":4,"repost":{"id":"1169004570","kind":"news","pubTimestamp":1614687445,"share":"https://ttm.financial/m/news/1169004570?lang=&edition=fundamental","pubTime":"2021-03-02 20:17","market":"us","language":"en","title":"6 Reasons Alibaba Is Set To Soar And Too Cheap To Ignore","url":"https://stock-news.laohu8.com/highlight/detail?id=1169004570","media":"Seekingalpha","summary":"Rising interest rates have caused a modest dip in stocks, and a pullback in tech stocks. Some individual companies have fallen into bear markets.Alibaba represents one of the highest quality  hyper-growth blue-chips you can buy today. It began the tech pullback highly undervalued and is now 42% undervalued.Post earnings, when management updated analysts on regulatory risks, the LT growth consensus from all 59 analysts went up from 22.3% to 26.0% CAGR. The growth outlook has improved.Yet BABA is ","content":"<p>Summary</p>\n<ul>\n <li>Rising interest rates have caused a modest dip in stocks, and a pullback in tech stocks. Some individual companies have fallen into bear markets.</li>\n <li>Alibaba represents one of the highest quality (though speculative) hyper-growth blue-chips you can buy today. It began the tech pullback highly undervalued and is now 42% undervalued.</li>\n <li>Post earnings, when management updated analysts on regulatory risks, the LT growth consensus from all 59 analysts went up from 22.3% to 26.0% CAGR. The growth outlook has improved.</li>\n <li>Yet BABA is now trading at some of the lowest valuations in its history, resulting in 27% CAGR consensus return potential through 2027, and 6X the risk-adjusted expected returns of the S&amp;P 500 for the next five years.</li>\n <li>Thanks to the potential to become one of the best dividend growth blue-chips of tomorrow, I've invested almost $50,000 into BABA, and am willing to invest up to $100K if it keeps falling in the short term. For those comfortable with the complex risk profile of this company, and who use proper diversification and prudent risk management, BABA represents a potentially life-changing and rich retirement dream-making long-term investment opportunity.</li>\n <li>This idea was discussed in more depth with members of my private investing community, The Dividend Kings.Get started today »</li>\n</ul>\n<p>It's been a volatile few weeks for stocks, but tech stocks in particular.</p>\n<p><img src=\"https://static.tigerbbs.com/54960030434467240b8c2876e6eaab19\" tg-width=\"640\" tg-height=\"389\" referrerpolicy=\"no-referrer\">While the S&amp;P 500 is just barely off its recent all-time highs, the Nasdaq has fallen 6%. And of course, it's a market of stocks, not a stock market. Individual tech stocks are in corrections or even bear markets.</p>\n<ul>\n <li>tech stocks in general, are now in a pullback</li>\n <li>induced by rising rate concerns</li>\n</ul>\n<p>Why Rising Rates Are NOT A Concern For Prudent Long-Term Investors</p>\n<p>In the modern era, primarily the last 25 years, all stocks have done well in rising long-term rate environments.</p>\n<p><img src=\"https://static.tigerbbs.com/790f8160df564e9692be64a3eb0e396f\" tg-width=\"640\" tg-height=\"484\" referrerpolicy=\"no-referrer\"><i>(Source: Ben Carlson)</i></p>\n<ul>\n <li>growth, value, small, large, didn't matter, stocks went up as rates rose</li>\n</ul>\n<ul>\n <li>A study from JPMorgan(NYSE:JPM)found that from 1963 through 2019 stocks generally went up as long as 10-year yields were under 5%.</li>\n <li>Goldman Sachs'(NYSE:GS)head of quantitative research finds that the rate of interest rate is more important than the actual rate itself</li>\n <li>37+ basis points per month is the tipping point strongly correlated with short-term corrections</li>\n <li><b>in the last month, 10-year yields are up 39 basis points</b></li>\n <li>a level that is historically correlated with mild and short market declines</li>\n <li>in other words, this stock market dip is 100% normal and expected by prudent investors who understand market history</li>\n</ul>\n<p>Even so-called \"bond alternatives,\" such as REITs, are not hurt by rising long-term rates.</p>\n<ul>\n <li>From 1972 to 2018 the % of REIT total returns explained by 10-year yields was just 2%</li>\n <li>had you been able to predict interest rates with perfect precision, you couldn't have predicted actual REIT returns</li>\n</ul>\n<p>Prudent long-term investors know that you don't actually have to predict interest rates to be successful.</p>\n<ul>\n <li>long-term interest rates are just one of many factors that determine company success over time</li>\n <li>and have a relatively small impact on fundamental growth rates</li>\n <li>bond prices are 100% a function of credit quality and LT interest rates</li>\n <li>stock prices are 91% a function (over the long-term) of fundamentals and valuations</li>\n <li>other than generating income, stocks and bonds are different asset classes that are nothing alike</li>\n <li><b>no stock is EVER a true \"Bond alternative\" because of this fundamental fact</b></li>\n</ul>\n<p><img src=\"https://static.tigerbbs.com/6deb7a5ba69273298a5256674c2dd2e8\" tg-width=\"640\" tg-height=\"526\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/74ba0ed8c210f5a079516c7da4f40e80\" tg-width=\"716\" tg-height=\"738\" referrerpolicy=\"no-referrer\"></p>\n<p>If you focus on the trinity of yield + growth + valuation you are optimizing the fundamentals that drive 91% of long-term stock returns.</p>\n<ul>\n <li>combining the 3 core fundamentals of long-term total returns with prudent risk management = practicing disciplined financial science</li>\n</ul>\n<p><b>My Personal Phoenix Retirement Portfolio Fundamentals (75% Dividend Stocks/25% Growth Stocks)</b></p>\n<ul>\n <li>average quality: 10.7/12 SWAN vs. 10.9 average aristocrat</li>\n <li>average safety score: 4.8/5 very safe vs. 4.7 average aristocrat</li>\n <li>average credit rating: A- stable vs. A- stable average aristocrat (2.5% 30-year bankruptcy risk)</li>\n <li><b>the yield on cost: 3.8%</b></li>\n <li><b>current yield: 3.3% vs. 1.6% S&amp;P, 2.1%</b>dividend aristocrats (our equity benchmark) and<b>1.8% a 60/40 stock/bond portfolio</b></li>\n <li><b>Morningstar long-term growth forecast: 16.2% CAGR</b>vs. 6.4% S&amp;P 500 &amp; 7.0% dividend aristocrats</li>\n <li><b>Dividend growth forecast: 7.0% CAGR</b>= almost 4X the rate of inflation, double every decade (every 15-years in inflation-adjusted dollars)</li>\n <li>weighted average forward PE: 16.6 vs. 18.9 historical norm vs. 21.9 S&amp;P 500</li>\n <li><b>average discount to fair value (Morningstar estimate): 12%</b>vs. -32% S&amp;P 500 and -13% aristocrats</li>\n <li><b>5-year analyst consensus total return potential</b>: 3.3% yield + 16.2% CAGR long-term growth +2.6% CAGR valuation boost =<b>22.1%CAGR</b>vs. 6.5% S&amp;P 500</li>\n <li><b>Risk-Adjusted Expected Return: 16.2% CAGR</b>vs. 4.0% CAGR S&amp;P 500 (<b>4.0X market's expected return</b>)</li>\n <li><i><b>LT Consensus Total Return Potential:</b></i><i>3.3% yield on cost + 16.2% growth =</i><i><b>19.5% CAGR</b></i><i>vs. 8.0% S&amp;P 500 and 9.1% dividend aristocrats</i></li>\n</ul>\n<p>How does a double the market's yield and LT growth consensus sound?</p>\n<p>How about the potential to quadruple the S&amp;P 500's returns over the next five years and more than double the market's long-term consensus return potential?</p>\n<p>You can't find that in any index fund, you have to build yourself. That's what DK Phoenix has been doing for almost a year, via a combination of opportunistic limit buying and dollar-cost averaging.</p>\n<ul>\n <li>I've invested about $500,000 of my life savings into the DK Phoenix strategy</li>\n <li>I'm definitely eating my own cooking</li>\n</ul>\n<p>The results so far have been spectacular. 40% gains from a portfolio that started out 100% bonds and has been buying every single day, including during record highs and overvalued markets.</p>\n<p>More importantly, this portfolio is generating an ocean of very safe, and steadily growing dividends.</p>\n<ul>\n <li>during the Great Recession S&amp;P 500 dividends down 25%</li>\n <li>this portfolio's dividends were flat</li>\n</ul>\n<p>However, I want to point out how the potential combination of strong yield + fantastic growth potential and attractive valuations means this portfolio is potentially set up for returns on par with the greatest investors in history.</p>\n<p><img src=\"https://static.tigerbbs.com/d1567a4569f51c6d5f83e6dd572db55c\" tg-width=\"640\" tg-height=\"412\" referrerpolicy=\"no-referrer\"></p>\n<p>But not from some complex or risky asset you have to manage and tie up your money in for seven to 15 years (as with hedge funds), but a 100% liquid world-class blue-chip investment.</p>\n<ul>\n <li>blue-chip dividend investing at its finest</li>\n <li>high-probability/low risk buys that are 91% likely to meet our goals over the long-term</li>\n</ul>\n<p>Note that this portfolio is 25% growth stocks, though every growth company is one I expect to eventually pay a dividend.</p>\n<p>Whether it takes 5 or 50 years doesn't matter to me, because I have 75% of my portfolio generating over $20,000 per year in very safe income that rises in any economic or market condition.</p>\n<p>Why I'm Backing Up The Truck On Alibaba In This Tech Pullback</p>\n<p>My personal Phoenix retirement portfolio is what tracks every Dividend Kings Daily Blue-Chip Deal Video Recommendation.</p>\n<p><img src=\"https://static.tigerbbs.com/ccec58a2a2e51918ad4619f5b10ae7b9\" tg-width=\"640\" tg-height=\"140\" referrerpolicy=\"no-referrer\"></p>\n<ul>\n <li>I've bought Alibaba (BABA) 87 times since April 2020</li>\n <li>investing a total of about $47,000</li>\n <li>about 6.9% of my personal Phoenix portfolio (100 companies)</li>\n <li>my personal risk cap on BABA is $100,000 for the next 20 years, 10X less than what I plan to invest in Amazon(NASDAQ:AMZN)</li>\n <li>my goal is to invest $1 million into Amazon in my lifetime, as fast as I can</li>\n <li>but still a potentially life-changing and rich retirement making investment (see reason five)</li>\n</ul>\n<p>Why am I willing to put up to $100,000 of my hard-earned savings to work in this speculative hyper-growth blue-chip?</p>\n<p>For the same 6 reasons that BABA at today's outrageously attractive valuation might be just what your diversified and prudently risk-managed portfolio needs.</p>\n<p>Reason 1: An Extremely High-Quality Company</p>\n<p>The Dividend Kings motto is \"Quality first and prudent valuation and sound risk management always.\"</p>\n<p>Alibaba Overall Quality: 80% = 10/12 Speculative SWAN</p>\n<table>\n <tbody>\n  <tr>\n   <td><b>BABA</b></td>\n   <td><b>Final Score</b></td>\n   <td><b>Rating</b></td>\n  </tr>\n  <tr>\n   <td>Balance Sheet Safety</td>\n   <td>88%</td>\n   <td>5/5 Very Safe</td>\n  </tr>\n  <tr>\n   <td>Business Model</td>\n   <td>90%</td>\n   <td>3/3 Wide and Stable Moat</td>\n  </tr>\n  <tr>\n   <td>Dependability</td>\n   <td>68%</td>\n   <td>2/4 Above-Average Dependability</td>\n  </tr>\n  <tr>\n   <td><b>Total</b></td>\n   <td><b>80%</b></td>\n   <td><b>10 (SWAN) - Speculative</b></td>\n  </tr>\n </tbody>\n</table>\n<p><i>(Source:Dividend Kings Safety &amp; Quality Tool) updated at the start and end of each day</i></p>\n<ul>\n <li>unchanged from last quarter</li>\n</ul>\n<p>DK overall quality scores factor in about 100 fundamental metrics covering</p>\n<ul>\n <li>dividend safety</li>\n <li>balance sheet strength</li>\n <li>short and long-term bankruptcy risk</li>\n <li>accounting and corporate fraud</li>\n <li>profitability and business model</li>\n <li>long-term sustainability</li>\n <li>management quality</li>\n <li>dividend friendly corporate culture/income dependability</li>\n</ul>\n<p><b>Alibaba Is the 136th Highest Quality Master List Company (Out of 490)</b></p>\n<p><img src=\"https://static.tigerbbs.com/c259ff2db589224b1c883dfd27a06abd\" tg-width=\"640\" tg-height=\"220\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: DK Safety &amp; Quality Tool) updated at the end of each day, sorted by overall quality score</i></p>\n<p>The DK Master List includes every dividend aristocrat, king, champion, and 12/12 Ultra SWAN quality company. Among the highest quality companies on earth, BABA ranks 136th.</p>\n<p>Alibaba's 80% quality score means its similar in quality to such 10/12 SWANs, 11/12 Super SWANs, and 12/12 Ultra SWANs as</p>\n<ul>\n <li>General Dynamics (GD): non-speculative dividend aristocrat</li>\n <li>salesforce.com (CRM): non - speculative hyper-growth</li>\n <li>Royal Bank of Canada (RY): non - speculative</li>\n <li>UnitedHealth Group (UNH): non - speculative</li>\n <li>Facebook (FB): non - speculative hyper-growth</li>\n <li>Cisco (CSCO): non - speculative</li>\n <li>Magellan Midstream Partners (MMP) - non-speculative</li>\n <li>Lockheed Martin (LMT) - non -speculative</li>\n <li>Texas Instruments (TXN) - non-speculative</li>\n <li>British American Tobacco (BTI) - non-speculative</li>\n</ul>\n<p>All told, our quality score includes 137 fundamental metrics pertaining to dividend safety, long-term dependability, and total returns. Every metric was selected based on</p>\n<ul>\n <li>decades of empirical data</li>\n <li>the experience of the greatest investors in history</li>\n <li>eight rating agencies</li>\n <li>and what blue-chip economists and analyst firms consider most closely correlated to a company's long-term success.</li>\n</ul>\n<p>Our goal is to ensure we see fundamental deterioration coming before dividends get cut and a company, in a worst-case scenario, goes bankrupt.</p>\n<ul>\n <li>even dividend aristocrats can fail (just ask GE or CTL investors)</li>\n <li>even dividend aristocrats can go bankrupt (just ask Kmart or Winn-Dixie investors)</li>\n</ul>\n<p>There are no sacred cows in the Dividend Kings universe. Where the fundamentals lead we always follow.</p>\n<ul>\n <li>the essence of financial science</li>\n</ul>\n<p>Reason 2: Remarkable Long-Term Growth Potential</p>\n<p><img src=\"https://static.tigerbbs.com/7c6b6a726a78d0e0d012df46602fd475\" tg-width=\"640\" tg-height=\"132\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: FactSet Research Terminal)</i></p>\n<ul>\n <li>according to FactSet the median LT growth consensus from all 59 analysts that cover BABA is 26.0% CAGR</li>\n <li>collectively these 59 experts know BABA better than anyone other than management</li>\n <li>pre-earnings growth consensus was 22.3%</li>\n</ul>\n<p><img src=\"https://static.tigerbbs.com/b39eecccd04752aa11a27f8f8c8d6587\" tg-width=\"640\" tg-height=\"390\" referrerpolicy=\"no-referrer\"></p>\n<ul>\n <li>YCharts LT growth consensus is less bullish but still showing 20% hyper-growth</li>\n</ul>\n<p><img src=\"https://static.tigerbbs.com/9090a70c545a4c112f90b02d4de12131\" tg-width=\"640\" tg-height=\"395\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: FAST Graphs, FactSet Research)</i></p>\n<ul>\n <li>5 analyst median FAST Graphs consensus is 25.3% CAGR LT growth</li>\n</ul>\n<p>Alibaba Medium-Term Growth Consensus</p>\n<table>\n <tbody>\n  <tr>\n   <td><b>Metric</b></td>\n   <td><b>Fiscal 2021 Consensus</b></td>\n   <td><b>2022 consensus growth</b></td>\n   <td><b>2023 consensus growth</b></td>\n   <td><b>2024 consensus growth</b></td>\n   <td><b>2025 consensus growth</b></td>\n   <td><p><b>2026 consensus growth</b></p></td>\n  </tr>\n  <tr>\n   <td>EPS</td>\n   <td>39%</td>\n   <td>15%</td>\n   <td>24%</td>\n   <td>23%</td>\n   <td>20%</td>\n   <td>16%</td>\n  </tr>\n  <tr>\n   <td>Owner Earnings (Buffett smoothed out FCF)</td>\n   <td>-3%</td>\n   <td>162%</td>\n   <td>NA</td>\n   <td>NA</td>\n   <td>NA</td>\n   <td>NA</td>\n  </tr>\n  <tr>\n   <td>Operating Cash Flow</td>\n   <td>45%</td>\n   <td>11%</td>\n   <td>18%</td>\n   <td>29%</td>\n   <td>NA</td>\n   <td>NA</td>\n  </tr>\n  <tr>\n   <td>Free cash flow</td>\n   <td>52%</td>\n   <td>-1%</td>\n   <td>25%</td>\n   <td>24%</td>\n   <td>NA</td>\n   <td>NA</td>\n  </tr>\n  <tr>\n   <td>EBITDA</td>\n   <td>58%</td>\n   <td>24%</td>\n   <td>23%</td>\n   <td>NA</td>\n   <td>NA</td>\n   <td>NA</td>\n  </tr>\n  <tr>\n   <td>EBIT (operating profit)</td>\n   <td>29%</td>\n   <td>40%</td>\n   <td>30%</td>\n   <td>NA</td>\n   <td>NA</td>\n   <td>NA</td>\n  </tr>\n </tbody>\n</table>\n<p><i>(Source: FAST Graphs, FactSet Research Terminal)</i></p>\n<p>20% to 26% CAGR LT growth consensus is one of the fastest of any company on earth, much less a $650 billion behemoth like BABA.</p>\n<p>Where is BABA's remarkable growth expected to come from?</p>\n<p><img src=\"https://static.tigerbbs.com/7b04a7c47511897fa2d2e3170feaf91b\" tg-width=\"640\" tg-height=\"413\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: earnings presentation)</i></p>\n<ul>\n <li>Alibaba has almost 1 billion users</li>\n <li>and is one of the fastest-growing cloud computing companies on earth</li>\n <li>#1 in cloud computing in China</li>\n</ul>\n<p><img src=\"https://static.tigerbbs.com/d8d32d464a818f669520b792adf9971a\" tg-width=\"640\" tg-height=\"484\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: earnings presentation)</i></p>\n<ul>\n <li><b>Alibaba is the Amazon/Alphabet/Facebook/PayPal/Microsoft of China</b></li>\n <li>it's basically a superior quality Chinese Nasdaq index</li>\n <li>just as Amazon is a superior quality alternative to the US Nasdaq</li>\n <li>except that BABA has even more optionality than Amazon courtesy of several<b>\"Super Apps\"</b>of which the US has no equivalent</li>\n <li>Super Apps are basically all the apps you use on a daily basis in one, and in China, they dominate the lives of almost 1.5 billion people</li>\n <li>ecosystems of steroids, and the ultimate wide-moat businesses</li>\n <li>the only effective limitation is government regulations (more on this in the risk profile)</li>\n</ul>\n<p><img src=\"https://static.tigerbbs.com/9f0062920c271ce804438eca217557aa\" tg-width=\"640\" tg-height=\"338\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: FactSet Research Terminal)</i></p>\n<ul>\n <li>27% annualized revenue growth through 2026</li>\n <li>vs. 19% for Amazon</li>\n <li>34% CAGR cloud computing revenue growth</li>\n <li>core Chinese commerce sales growth 28% CAGR</li>\n</ul>\n<p>With almost 1.5 billion Chinese consumers to tap into, Alibaba's growth runway is very long.</p>\n<ul>\n <li>its optionality is among the best of any company on earth</li>\n <li>potentially superior to even Amazon's</li>\n</ul>\n<p>Alibaba Consensus Profitability Forecast</p>\n<table>\n <tbody>\n  <tr>\n   <td><b>Year</b></td>\n   <td><b>Sales</b></td>\n   <td><b>FCF</b></td>\n   <td><b>EBITDA</b></td>\n   <td><b>EBIT</b></td>\n   <td><b>Net Income</b></td>\n  </tr>\n  <tr>\n   <td>2020</td>\n   <td>$71,376</td>\n   <td>$18,634.0</td>\n   <td>$22,077.0</td>\n   <td>$12,803.0</td>\n   <td>$20,902.0</td>\n  </tr>\n  <tr>\n   <td>2021</td>\n   <td>$109,049.0</td>\n   <td>$30,666.0</td>\n   <td>$32,294.0</td>\n   <td>$18,332.0</td>\n   <td>$26,210.0</td>\n  </tr>\n  <tr>\n   <td>2022</td>\n   <td>$142,453.0</td>\n   <td>$33,923.0</td>\n   <td>$40,043.0</td>\n   <td>$24,985.0</td>\n   <td>$27,169.0</td>\n  </tr>\n  <tr>\n   <td>2023</td>\n   <td>$172,942.0</td>\n   <td>$39,671.0</td>\n   <td>$49,694.0</td>\n   <td>$33,156.0</td>\n   <td>$34,068.0</td>\n  </tr>\n  <tr>\n   <td>2024</td>\n   <td>$215,267.0</td>\n   <td>$45,789.0</td>\n   <td>$59,475.0</td>\n   <td>$43,961.0</td>\n   <td>$43,031.0</td>\n  </tr>\n  <tr>\n   <td>2025</td>\n   <td>$264,808.0</td>\n   <td>NA</td>\n   <td>$72,896.0</td>\n   <td>$57,133.0</td>\n   <td>$54,736.0</td>\n  </tr>\n  <tr>\n   <td>2026</td>\n   <td>$296,476.0</td>\n   <td>NA</td>\n   <td>$95,192.0</td>\n   <td>$70,453.0</td>\n   <td>$63,654.0</td>\n  </tr>\n </tbody>\n</table>\n<table>\n <tbody>\n  <tr>\n   <td><b>Year</b></td>\n   <td><b>FCF Margin</b></td>\n   <td><b>EBITDA Margin</b></td>\n   <td><b>EBIT Margin</b></td>\n   <td><b>Net Margin</b></td>\n  </tr>\n  <tr>\n   <td>2020</td>\n   <td>26.1%</td>\n   <td>30.9%</td>\n   <td>17.9%</td>\n   <td>29.3%</td>\n  </tr>\n  <tr>\n   <td>2021</td>\n   <td>28.1%</td>\n   <td>29.6%</td>\n   <td>16.8%</td>\n   <td>24.0%</td>\n  </tr>\n  <tr>\n   <td>2022</td>\n   <td>23.8%</td>\n   <td>28.1%</td>\n   <td>17.5%</td>\n   <td>19.1%</td>\n  </tr>\n  <tr>\n   <td>2023</td>\n   <td>22.9%</td>\n   <td>28.7%</td>\n   <td>19.2%</td>\n   <td>19.7%</td>\n  </tr>\n  <tr>\n   <td>2024</td>\n   <td>21.3%</td>\n   <td>27.6%</td>\n   <td>20.4%</td>\n   <td>20.0%</td>\n  </tr>\n  <tr>\n   <td>2025</td>\n   <td>NA</td>\n   <td>27.5%</td>\n   <td>21.6%</td>\n   <td>20.7%</td>\n  </tr>\n  <tr>\n   <td>2026</td>\n   <td>NA</td>\n   <td>32.1%</td>\n   <td>23.8%</td>\n   <td>21.5%</td>\n  </tr>\n </tbody>\n</table>\n<p><i>(Source: FactSet Research Terminal)</i></p>\n<ul>\n <li>Alibaba is still relatively early in its growth cycle</li>\n <li>investing very heavily into R&amp;D and growth capex: $12.6 billion in 2020</li>\n <li>$37.2 billion growth spending consensus in 2026</li>\n <li>yet analysts expect already impressive profitability to remain relatively stable during the next five years</li>\n</ul>\n<p><b>Alibaba Consensus Potential Future Dividend Forecast</b></p>\n<table>\n <tbody>\n  <tr>\n   <td><b>Year</b></td>\n   <td><b>FCF/Share Consensus</b></td>\n   <td><b>Dividend Per Share (50% Payout Ratio)</b></td>\n   <td><b>Yield On Today's Cost</b></td>\n   <td><b>Consensus Yield Potential</b></td>\n   <td><b>2026 Consensus Price</b></td>\n  </tr>\n  <tr>\n   <td>2020</td>\n   <td>$6.98</td>\n   <td>$3.49</td>\n   <td>1.47%</td>\n   <td>NA</td>\n   <td>NA</td>\n  </tr>\n  <tr>\n   <td>2021</td>\n   <td>$8.95</td>\n   <td>$4.48</td>\n   <td>1.88%</td>\n   <td>1.39%</td>\n   <td>$323.00</td>\n  </tr>\n  <tr>\n   <td>2022</td>\n   <td>$10.70</td>\n   <td>$5.35</td>\n   <td>2.25%</td>\n   <td>1.41%</td>\n   <td>$379.00</td>\n  </tr>\n  <tr>\n   <td><i><b>2023</b></i></td>\n   <td><i><b>$13.84</b></i></td>\n   <td><i><b>$6.92</b></i></td>\n   <td><i><b>2.91%</b></i></td>\n   <td><i><b>1.48%</b></i></td>\n   <td><i><b>$466.00</b></i></td>\n  </tr>\n </tbody>\n</table>\n<p><i>(Source: FactSet Research Terminal)</i></p>\n<ul>\n <li>if Alibaba were to start paying 50% of its FCF as dividends then by 2023 that would equal a yield on cost of almost 3% and 1.5% consensus yield</li>\n</ul>\n<p>Why do I expect BABA to eventually start paying dividends?</p>\n<p><b>Alibaba Consensus Balance Sheet Forecast</b></p>\n<p><img src=\"https://static.tigerbbs.com/61c78f5b92f0f7db55569cdd0cd8cd2f\" tg-width=\"640\" tg-height=\"258\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: FactSet Research Terminal)</i></p>\n<ul>\n <li>despite spending $37 billion to fund growth in 2026, analysts expect BABA to end fiscal 2026 with $275 billion in cash and $260 billion in net cash</li>\n <li>more than Apple(NASDAQ:AAPL)had when it started buying back stock and paying dividends</li>\n</ul>\n<p>What's more, by 2024 alone analysts expect BABA's annual free cash flow to reach $46 billion.</p>\n<p><img src=\"https://static.tigerbbs.com/a072c7a0e2793b347b635e08315d24bc\" tg-width=\"640\" tg-height=\"148\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: FactSet Research Terminal)</i></p>\n<ul>\n <li>if FCF grows at the 26% LT EPS growth consensus rate then by 2026 $73 billion in annual free cash flow</li>\n</ul>\n<p>The bottom line on BABA is that it's the #1 global digital retailer but so much more. And it has the potential to make patient long-term investors extremely wealthy and eventually fund comfortable retirements from future dividends alone.</p>\n<ul>\n <li>what I call my \"Jack Ma retirement plan\"</li>\n</ul>\n<p>Yet despite this incredible quality and growth potential, the market is mispricing BABA to a remarkable degree right now.</p>\n<p>Reason 3: One Of Most Undervalued Tech Stocks In The World</p>\n<table>\n <tbody>\n  <tr>\n   <td><b>Metric</b></td>\n   <td><b>Historical Fair Value Multiples (all-years)</b></td>\n   <td><b>Fiscal 2021</b></td>\n   <td><b>Fiscal 2022</b></td>\n   <td><b>Fiscal 2023</b></td>\n  </tr>\n  <tr>\n   <td>Earnings</td>\n   <td>32.2</td>\n   <td>$334</td>\n   <td>$386</td>\n   <td>$480</td>\n  </tr>\n  <tr>\n   <td>Owner Earnings (Buffett smoothed out FCF)</td>\n   <td>24.6</td>\n   <td>$218</td>\n   <td>$572</td>\n   <td>NA</td>\n  </tr>\n  <tr>\n   <td>Operating Cash Flow</td>\n   <td>23.1</td>\n   <td>$325</td>\n   <td>$362</td>\n   <td>$428</td>\n  </tr>\n  <tr>\n   <td>Free Cash Flow</td>\n   <td>30.7</td>\n   <td>$338</td>\n   <td>$336</td>\n   <td>$421</td>\n  </tr>\n  <tr>\n   <td>EBITDA</td>\n   <td>33.2</td>\n   <td>$389</td>\n   <td>$485</td>\n   <td>$597</td>\n  </tr>\n  <tr>\n   <td>EBIT (operating income)</td>\n   <td>45.1</td>\n   <td>$298</td>\n   <td>$416</td>\n   <td>$541</td>\n  </tr>\n  <tr>\n   <td><b>Average</b></td>\n   <td><b>$307</b></td>\n   <td><b>$413</b></td>\n   <td><b>$485</b></td>\n  </tr>\n  <tr>\n   <td>Current Price</td>\n   <td>$237.76</td>\n  </tr>\n  <tr>\n   <td><p><i><b>Discount To Fair Value</b></i></p></td>\n   <td><i><b>23%</b></i></td>\n   <td><i><b>42%</b></i></td>\n   <td><i><b>51%</b></i></td>\n  </tr>\n  <tr>\n   <td><i>Upside To Fair Value</i></td>\n   <td><i>29%</i></td>\n   <td><i>74%</i></td>\n   <td><i>104%</i></td>\n  </tr>\n  <tr>\n   <td><p><i><b>Annualized Total Return Potential</b></i></p></td>\n   <td><i><b>NA</b></i></td>\n   <td><i><b>74%</b></i></td>\n   <td><i><b>46%</b></i></td>\n  </tr>\n </tbody>\n</table>\n<p><i>(Source: F.A.S.T. Graphs, FactSet Research)</i></p>\n<p>BABA is trading at a 42% discount to fiscal 2022 consensus fundamentals (which ends March 2022)</p>\n<ul>\n <li>A return to average historical fair value by the end of March 2023 would result in a 46% CAGR total return</li>\n <li>2021 fair value range: $336 to $572</li>\n <li>2021 Harmonic Average Fair Value (smooths out outliers): $413</li>\n</ul>\n<p>Even using the most conservative fair value of $336, BABA is still 29% undervalued and a potentially good speculative buy.</p>\n<p><img src=\"https://static.tigerbbs.com/6c6cd6870a518767764bd87d37ec06d4\" tg-width=\"640\" tg-height=\"376\" referrerpolicy=\"no-referrer\"><i>(Source: FAST Graphs, FactSet Research)</i></p>\n<ul>\n <li>on a blended PE basis, BABA is now tied for the lowest valuation in its history on the NYSE</li>\n <li>in other words, if you've ever wanted to buy BABA, now is the time</li>\n <li>very likely to be near its eventual bottom</li>\n</ul>\n<p>I know that a lot of readers are now thinking \"sure, consensus estimates say BABA is a growth powerhouse, BUT what if analysts are wrong.\"</p>\n<p>There is one thing we know for certain about all growth consensus estimates.</p>\n<ul>\n <li>they are wrong</li>\n <li>the question is how much</li>\n</ul>\n<p><b>Alibaba Analyst Scorecard</b></p>\n<p><img src=\"https://static.tigerbbs.com/bd5201fe390f06c8cd94462a06114fdd\" tg-width=\"640\" tg-height=\"376\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/6b1da8d579e9049d31188aafb07d3c47\" tg-width=\"640\" tg-height=\"346\" referrerpolicy=\"no-referrer\"></p>\n<p>Despite a highly complex business model analysts are relatively good at forecasting BABA's growth. Specifically, the company has only missed two-year earnings growth forecasts twice out of the six years that analysts have offered them.</p>\n<ul>\n <li>the margin of error 20% to the upside and downside (modern era with lots of analyst coverage)</li>\n <li>long-term growth consensus range: 20.0% to 26% CAGR</li>\n <li>long-term growth consensus (from all 60 analysts ): 25.3% CAGR</li>\n <li>the margin of error adjusted long-term growth consensus range: 16% to 32% CAGR</li>\n</ul>\n<p><img src=\"https://static.tigerbbs.com/10e55ff4c0570b0156c5fc04134c6c90\" tg-width=\"640\" tg-height=\"456\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: F.A.S.T. Graphs, FactSet Research)</i></p>\n<p>The current analyst consensus of 26.0% CAGR is similar to the growth rate of the last five years. The historical growth range since BABA came to the NYSE is 20% to 44% CAGR.</p>\n<p>The secular growth catalysts represented by BABA's dominance in Chinese digital payments, banking, cloud computing, online retail, digital marketing, etc., means that I consider the analyst growth consensus range reasonable and achievable.</p>\n<p>Stricter regulations are not expected to hamper BABA's growth significantly, according to the 60 analyst median consensus.</p>\n<p>Reason 4: Total Return Potential That Could Make You Rich</p>\n<ul>\n <li>for non-dividend stocks, total returns generated from growth and valuation mean reversion is the entire point for most investors</li>\n <li>BABA's consensus return potential is outstanding</li>\n</ul>\n<p><b>BABA 2023 Consensus Return Potential</b></p>\n<p><img src=\"https://static.tigerbbs.com/ba5fce782ee2484df31380823cbd08d1\" tg-width=\"640\" tg-height=\"383\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: F.A.S.T. Graphs, FactSet Research)</i></p>\n<p>If BABA grows as analysts expect through March 2023, and returns to historical fair value, then investors could expect</p>\n<ul>\n <li>102% total returns</li>\n <li>39.9% CAGR returns</li>\n <li>vs. 2.9% CAGR S&amp;P 500</li>\n <li><i><b>14X better than the S&amp;P 500</b></i></li>\n</ul>\n<p>Alibaba March 2027 Consensus Return Potential</p>\n<p><img src=\"https://static.tigerbbs.com/ad665b05d566bc36268bf51f43f642a8\" tg-width=\"640\" tg-height=\"395\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: F.A.S.T. Graphs, FactSet Research) - actual consensus EPS estimates through 2026</i></p>\n<p>If BABA grows as analysts expect through March 2027, and returns to historical fair value, then you could expect</p>\n<ul>\n <li>324% total returns, more than quadrupling your investment</li>\n <li>26.8% CAGR returns</li>\n <li>vs. 6.5% CAGR S&amp;P 500</li>\n</ul>\n<p>Over the very long term, here's what analysts expect.</p>\n<ul>\n <li>0% yield + 26.0% CAGR growth = 26.0% CAGR total returns (16% to 32% CAGR range)</li>\n <li>vs. 8.0% CAGR S&amp;P 500 and 9.1% CAGR dividend aristocrats</li>\n</ul>\n<p>Reason 5: Total Return Potential That Could Turn Thousands Into Tens Of Millions Over Decades</p>\n<p>What does potential hyper-growth sustained over many years and decades look like? Generation wealth, that can not just fund your rich retirement, but that of your children and grandchildren as well.</p>\n<p>Alibaba 30-Year Monte Carlo Simulation, Statistical Inflation+ Tax Adjusted Total Return Forecast</p>\n<p><img src=\"https://static.tigerbbs.com/fdf77d6747dcbef9c96c2442919fb370\" tg-width=\"640\" tg-height=\"201\" referrerpolicy=\"no-referrer\"><img src=\"https://static.tigerbbs.com/4e592eb0d96f33779a576b8fee99193a\" tg-width=\"640\" tg-height=\"294\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/d7a3bf90aac22084eea55216a46577c1\" tg-width=\"640\" tg-height=\"282\" referrerpolicy=\"no-referrer\"></p>\n<blockquote>\n <i>Monte Carlo simulation results for 5000 portfolios with $1,000 initial portfolio balance using available statistical model data from Jan 2015 to Dec 2020.Returns were modeled as correlated random samples from a multivariate normal distribution.The historical pre-tax return for the selected portfolio for this period was 21.09% mean return (14.38% CAGR) with a 36.62% standard deviation of annual returns.The simulated asset returns were adjusted based on provided tax assumptions.The simulated inflation model used historical inflation with a 1.75% mean and 0.94% standard deviation based on the Consumer Price Index (CPI-U) data from Jan 2015 to Dec 2020.The generated inflation samples were correlated with simulated asset returns based on historical correlations.The available historical data for the simulation inputs was constrained by Alibaba Group Holding Limited (BABA) [Oct 2014 - Feb 2021]. (Source: Portfolio Visualizer)</i>\n</blockquote>\n<p>BABA's historical returns are depressed because it's currently in a bear market. Yet even if it delivers historical returns over the next 30 years, the standard retirement time frame there is an 80% statistical probability that</p>\n<ul>\n <li>$1,000 invested today becomes $6,500 to $324,000</li>\n <li>adjusted-for inflation and taxes</li>\n <li>assuming top tax bracket, including for my home state of MN</li>\n</ul>\n<p>What if BABA is able to sustain approximately 15% CAGR growth for longer than 30 years? Then a modest investment today could transform into generation wealth.</p>\n<p>Alibaba 75-Year Monte Carlo Simulation, Statistical Inflation+ Tax Adjusted Total Return Forecast</p>\n<p><img src=\"https://static.tigerbbs.com/130bb2a9ff8bb6a1de235ce4fda182f6\" tg-width=\"640\" tg-height=\"203\" referrerpolicy=\"no-referrer\"><img src=\"https://static.tigerbbs.com/7a1be76959eaedd5e25ed17b15702546\" tg-width=\"640\" tg-height=\"291\" referrerpolicy=\"no-referrer\"><i>(Source: Portfolio Visualizer)</i></p>\n<ul>\n <li>with a $75,000 total investment, made at the best valuations in five years, there is a very good statistical chance that I will eventually become an Alibaba millionaire</li>\n <li>there is a decent chance that my children and grandchildren will be Alibaba billionaires</li>\n</ul>\n<p>Reason 6: One Of The Most Reasonable And Prudent Growth Stocks You Can Buy Today</p>\n<p>I never recommend a company, much less put my own money at risk, without first knowing exactly how prudent a potential investment it is relative to the S&amp;P 500, most people's default alternative.</p>\n<p><img src=\"https://static.tigerbbs.com/28d872260c41f72ddc16460a3024e8bf\" tg-width=\"640\" tg-height=\"197\" referrerpolicy=\"no-referrer\"></p>\n<p>The investment decision score is based on valuation and the three core principles of all successful long-term investors.</p>\n<img src=\"https://static.tigerbbs.com/25b7070d1af7586faee7c2814d82bb5c\" tg-width=\"552\" tg-height=\"774\">\n<table>\n <tbody>\n  <tr></tr>\n  <tr></tr>\n </tbody>\n</table>\n<p><i>(Source:Dividend Kings Automated Investment Decision Tool)</i></p>\n<p>BABA is one of the most reasonable and prudent hyper-growth stocks you can buy today. It offers</p>\n<ul>\n <li>objectively superior quality to the average S&amp;P 500 company (credit ratings and ROC)</li>\n <li>much faster growth (3 to 4X faster)</li>\n <li>much superior valuation (mirror image of the S&amp;P 500)</li>\n <li><b>6X the 5-year risk-adjusted expected returns</b></li>\n</ul>\n<p>That's assuming you're</p>\n<ul>\n <li>comfortable with the risk profile (see dive section)</li>\n <li>own it within a diversified and prudently risk-managed portfolio</li>\n</ul>\n<p>Alibaba Risk Profile: Why BABA Isn't Right For Everyone<img src=\"https://static.tigerbbs.com/e3b51aa88280a43b2551902a5ae635ef\" tg-width=\"640\" tg-height=\"223\" referrerpolicy=\"no-referrer\">Fundamental Risk Summary</p>\n<blockquote>\n In our view, the most pressing risks to the Alibaba investment thesis are a sustained slowdown in Chinese consumption patterns, e-commerce competition, increased regulatory scrutiny, and the possibility that ancillary businesses divert management's attention and reduce profitability.China's e-commerce landscape has become increasingly competitive, with Pinduoduo registering faster GMV and user growth than Alibaba with the support of Tencent's traffic and its group-buying traffic generation method, and JD.com positioning itself as a credible rival through its fulfillment capability, quality assurance, and its partnerships with Tencent. These platforms do not yet have Alibaba's scale in China, but they specialize in specific products or services, or markets, which might impede Alibaba's growth.Alibaba is also subject to increased online and mobile payment regulation. Financial regulators in China have continuously scrutinized online and mobile payment services. Alibaba has persistently faced the issue of counterfeit and infringing goods on its marketplaces. Hangzhou government's assigning of representatives to work inside Alibaba also raise concerns of some investors, although there is no evidence of consequence of value destruction for Alibaba.Expansion into peripheral businesses might distract management, reduce profitability without materially improve Alibaba's ecosystem. While we're optimistic about Alibaba's ability to become a preferred partner for international retailers and consumer brands looking to sell in China, the firm does not enjoy the same network effect and brand recognition in other countries, and it may face challenges directly expanding in these markets...Like many other Chinese Internet companies listed in overseas markets, Alibaba operates under a\n <b>variable interest entity, or VIE, structure</b>designed to let companies bypass Chinese legal restrictions on foreign ownership in certain sectors.Alibaba's foreign investors will essentially hold shares of Alibaba's VIE domiciled in the Cayman Islands. We don't expect any legal challenges to VIE structures by the Chinese government in the future. However, if the legitimacy of Alibaba's related VIE is found to violate applicable law or regulation, Chinese regulatory authorities might take action against the VIE, including revoking the business and operating licenses of Alibaba's subsidiaries or the VIE, or discontinuing, restricting, or restructuring Alibaba's operations. Since the Chinese Ministry of Commerce has the jurisdiction to regulate VIEs, we believe overseas investors would have limited legal rights...Despite\n <b>management's proven execution capabilities</b>,\n <b>we have concerns regarding Alibaba's corporate governance</b>, which is reflected in our Poor equity stewardship rating.In our view,\n <b>Alibaba is led by a capable and ambitious management team</b>. Founder and former executive chairman Jack Ma has been the keeper of the flame since the company's founding in 1999. Under his leadership, Alibaba has become China's leading e-commerce player, accounting for the majority of transaction volume for China's online shopping industry.Over the past decade, Taobao has transformed the shopping behaviors of millions of Chinese consumers. We believe management has also done a commendable job developing and preserving Alibaba's wide economic moat by building several other leading online marketplaces and platforms such a Tmall, Juhuasuan, Alibaba.com, AliExpress, Alipay, AliCloud, and Ele.me. Although the company faces a potentially uneven long-term economic backdrop and new sources of competition in China,\n <b>we remain confident that Alibaba can sustain its wide economic moat over the long term under its existing leadership.</b>Ma's decision to step away from Alibaba's executive chairman role in 2019 and the company's board of directors will not affect our positive long-term bias for two reasons. First,\n <b>we believe recent results demonstrate that Alibaba has a deep management bench</b>,\n <b>including current CEO Daniel Zhang</b>(who was appointed CEO of Alibaba Group in May 2015, will assume the chairman role in 2019, and played a central role in the development of the Singles Day shopping event, building the Tmall platform from a regional to global business-to-consumer platform, and deploying several of Alibaba's \"New Retail\" strategies) and executive vice chairman Joe Tsai. Second, we believe Ma's involvement with the Alibaba Partnership--a group of core company managers--will allow him to stay involved with key strategic decisions...We harbor concerns about Alibaba's partnership structure, which might jeopardize the board's independence.The partnership is led by a committee of five, including Ma, executive vice chairman Joe Tsai, and CEO Daniel Zhang. The Alibaba Partnership has the exclusive right to nominate or appoint up to a simple majority of the members of its board of directors.Any board candidate it nominates is presented to shareholders for voting. If the candidate is not elected by shareholders, the partnership can appoint another candidate without a vote. That candidate will serve as an interim director until the next annual general meeting, where either the same candidate or yet another nominee proposed by Alibaba partners will stand for election.The current board of directors is composed of 11 directors, five of which are Alibaba Partnership nominees. Alibaba Partnership can also nominate or appoint two additional directors to the board, which would increase the number of directors to 13, and the Partnership will get majority control of the board.\n <b>The Partnership essentially controls the board and limits the influence of outside shareholders</b>.\" - Morningstar (emphasis added)\n</blockquote>\n<p>MSCI, Reuters and Morningstar, as well as S&amp;P, Fitch, and Moody's have concerns about BABA's corporate governance, which is factored into each company's respective rating on BABA's credit and material ESG risk (more on that later).</p>\n<ul>\n <li>all Chinese companies are speculative</li>\n <li>thus requiring a 5% higher margin of safety to be a potentially good buy (20% in the case of BABA)</li>\n <li>investors not comfortable with BABA's complex risk profile should not own it</li>\n <li>no company is right for everyone</li>\n</ul>\n<p>Alibaba ESG Risk Analysis: An Important Component Of A Company's Overall Financial Risk Profile (But Especially For Chinese Tech Companies)</p>\n<ul>\n <li>critically important to anyone concerned about corporate governance and potential accounting fraud</li>\n</ul>\n<p>In today's hyperpolarized political climate, some investors consider ESG to be political/personal ethics/opinion-driven nonsense.</p>\n<p>ESG as measured by institutions is NOT simply the concern of \"woke\" and \"on-trend\" hippy millennials trying to virtue signal to impress Silicon Valley venture capitalists or social media followers.</p>\n<blockquote>\n Companies with strong ESG profiles may be better positioned for future challenges and experience fewer instances of bribery, corruption, and fraud.\" - MSCI\n</blockquote>\n<p>According to the world's best risk-assessors, ESG metrics are a critical component of a company's overall risk profile. Here's who considers ESG important and builds it into their safety models and ratings.</p>\n<ul>\n <li>BlackRock - #1 asset manager in the world</li>\n <li>MSCI - #1 indexing giant</li>\n <li>Morningstar</li>\n <li>Reuters/Refinitiv</li>\n <li>ISS (Institutional Shareholder Services) - #1 corporate proxy firm on earth</li>\n <li>S&amp;P</li>\n <li>Fitch</li>\n <li>Moody's</li>\n <li>DBRS (Canadian credit rating agency)</li>\n <li>AMBest (insurance industry rating agency)</li>\n</ul>\n<p>The reason some investors consider ESG to be political is that some investors consider some industries to be inherently \"evil\" such as tobacco, energy, big tech, pharma, health insurers, fast-food, snack foods, and defense contractors.</p>\n<ul>\n <li>such opinions are personal and based on individual ethics</li>\n <li><b>ESG scores as calculated by institutions are quantitatively based and focused on only fundamental financial risks to the underlying business</b></li>\n <li>they are compared against industry peers and as objective as can be realistically expected</li>\n</ul>\n<p>Personal ethical or political opinions are not what rating agencies or asset managers care about.</p>\n<p>MSCI rates over 2,800 global companies on 37 ESG metrics, using a quantitative and qualitative approach, just as all the rating agencies do, and Ben Graham recommended.</p>\n<blockquote>\n Our global team of 185 experienced research analysts assesses thousands of data points across 37 ESG Key Issues, focusing on the intersection between a company's core business and the industry issues that can create significant risks and opportunities for the company. Companies are rated on an AAA-CCC scale\n <b>relative to the standards and performance of their industry peers</b>...\n</blockquote>\n<p><img src=\"https://static.tigerbbs.com/298cf61010c39363fd5dc1b3438f0774\" tg-width=\"640\" tg-height=\"570\" referrerpolicy=\"no-referrer\"></p>\n<blockquote>\n The MSCI ESG rating model seeks to answer four key questions about companies:• What are the most significant ESG risks and opportunities facing a company and its industry?• How exposed is the company to those key risks and/or opportunities?• How well is the company managing key risks and opportunities?• What is the overall picture for the company and how does it compare to its global industry peers?\" - MSCI\n</blockquote>\n<p><img src=\"https://static.tigerbbs.com/af3bf10cdfd7ab0fe07e7c636b3eded9\" tg-width=\"640\" tg-height=\"551\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: MSCI)</i></p>\n<p><b>The ESG scores you find from the best risk-assessors in the world are not opinions based on political correctness.They use a quantitative approach to fundamental company risk analysis.</b>One based on decades of historical data pertaining to minimizing the risk of fundamental deterioration, bankruptcy, and stock/bond investors getting wiped out.</p>\n<ul>\n <li>ESG risk ratings + trends make up about 20% of the overall DK quality score for most companies that have an ESG rating from MSCI, Morningstar/Sustainalytics, and Reuters/Refinitiv</li>\n</ul>\n<p><img src=\"https://static.tigerbbs.com/918fd6ab7c2e2163bd8d547d050d75d6\" tg-width=\"640\" tg-height=\"512\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/8a8bd15a9cc3aea38257b3c9645d424f\" tg-width=\"640\" tg-height=\"220\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: MSCI)</i></p>\n<ul>\n <li>based on the 12 material sustainability factors MSCI's 185 industry experts believe is important to financial risk for midstream companies, BABA scores are in the bottom 37% of its peers (below average)</li>\n <li>that score is has been improving over the last four years</li>\n <li>though it dipped one level in the 2020 annual update</li>\n</ul>\n<p>How Morningstar/Sustainalytics Assesses Long-Term ESG Financial Risk</p>\n<ul>\n <li>Morningstar/Sustainalytics cares about material ESG variables that are historically correlated to a company's enterprise value (market cap + net debt)</li>\n <li>Financial risk NOT political/personal ethical opinions are what Morningstar assesses</li>\n <li>20 fundamental metrics analyzed, compared to industry peers</li>\n <li>100 point risk scale</li>\n <li>lower is better</li>\n</ul>\n<p><img src=\"https://static.tigerbbs.com/6235ae87804a6aa4155b7553cf0470ef\" tg-width=\"640\" tg-height=\"406\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/22bc0cb2ca3614062e1aaabda81de4f0\" tg-width=\"640\" tg-height=\"370\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/2b225070612fbf42d76647657fd9c799\" tg-width=\"640\" tg-height=\"420\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/a2d7fbe67e46b7732bad777d103ec779\" tg-width=\"640\" tg-height=\"286\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/4e030c1a04fb5a8ba813bcf1831db84b\" tg-width=\"640\" tg-height=\"471\" referrerpolicy=\"no-referrer\"></p>\n<p>Every controversy surrounding BABA is factored into Morningstar ESG risk rating. That includes the controversies around anti-trust practices for which it's now under investigation by Chinese regulators.</p>\n<ul>\n <li>Morningstar considers this to be a medium ESG risk industry</li>\n <li>and management is doing an average job of managing that risk</li>\n <li>Morningstar scores BABA 26.2 \"medium risk\" in the bottom 25% of tech companies and in the top 43% of all 13,645 companies Morningstar rates</li>\n <li>risk rating increased from 24.6 to 26.2 in the past year due to increasing regulatory concerns</li>\n</ul>\n<p>Reuters/Refinitiv also provides ESG financial risk ratings.</p>\n<ul>\n <li>over 150 industry experts covering over 7,000 global companies</li>\n <li>based on 400+ fundamental metrics</li>\n <li>and 178 materially important financial ESG risk factors</li>\n</ul>\n<p><img src=\"https://static.tigerbbs.com/7da4560ef863e32a307af7f3a93b28d1\" tg-width=\"640\" tg-height=\"426\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/078e47b8a22efff637d578f67d1bdbbf\" tg-width=\"640\" tg-height=\"308\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/26ac2395f9786b77c8f795cd0c659d9a\" tg-width=\"640\" tg-height=\"847\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: Refinitiv)</i></p>\n<p><img src=\"https://static.tigerbbs.com/2c212bc0cfadad173dc51c91fbee9438\" tg-width=\"640\" tg-height=\"435\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: Interactive Brokers)</i></p>\n<ul>\n <li>Reuters ranks BABA as in the bottom 30% of its peers on actual financial ESG risk</li>\n <li>in the top 40% in terms of environmental issues</li>\n <li>bottom 30% for social</li>\n <li>bottom 20% for corporate governance</li>\n <li>and near the very bottom of its industry on controversies</li>\n <li>for a combined score that's in the bottom 10% of its peers</li>\n <li>which is why BABA's dependability score fell from 75% to 68% and resulted in a downgrade from 11/12 to 10/12 speculative quality (about two months ago)</li>\n <li>and why I'm looking to invest a maximum of $100K into BABA vs. $1 million into far lower risk Amazon</li>\n <li>risks with BABA are far higher than with AMZN</li>\n</ul>\n<p>When no less than 10 of the world's most reputable risk assessors say something is important to long-term financial risk for a company you can be sure that Dividend Kings will include it in our 61 metric safety model and 126 point quality score (converted to a 100% scale).</p>\n<ul>\n <li>there is no such thing as a \"risk-free\" company</li>\n <li>factoring in all material financial risks is how you determine whether a company is appropriate for your needs</li>\n <li>and how we determine the margin of safety required to compensate us for that risk and thus determine potentially good buy prices or better</li>\n <li>no average investor can ever be a true expert on a company</li>\n <li>but DK knows where to find the most reliable expert data to create a comprehensive safety, dependability, and quality score that includes every major risk factor a company has</li>\n</ul>\n<p>No less than Ben Graham, the father of securities analysis considered qualitative factors critical to making prudent long-term investing decisions.</p>\n<blockquote>\n <i>... a satisfactory statistical exhibition is a necessary though by no means a sufficient condition for a favorable decision by the analyst.\"</i>-Benjamin Graham, Security Analysis (1951 ed.), Page 76\n</blockquote>\n<p>In other words, Graham considered a combination of quantitative and qualitative analysis, looking at the past, present, and likely future, to be the optimal strategy for making sound long-term investments.</p>\n<ul>\n <li>Dividend Kings uses risk ratings from eight of the world's most reputable agencies</li>\n <li>if fundamentals weaken our model will know it and our scores, ratings, and recommendations will change accordingly</li>\n</ul>\n<p>Bottom Line: Alibaba Is Set To Soar And Too Cheap To Ignore</p>\n<p>I can't tell you what any stock will do over the next few weeks, months or even a year or two.</p>\n<ul>\n <li>according to JPMorgan Asset Management, 92% of 12-month returns are a function of luck</li>\n <li>over 10+ years 90% to 91% of returns are a function of fundamentals</li>\n <li>over the long-term fundamentals are 11X as powerful as luck</li>\n</ul>\n<p>Alibaba represented one of the most undervalued hyper-growth tech blue-chips before this interest rate pullback in tech began.</p>\n<p>Alibaba's recent decline has been sharper than many peers, which isn't justified by its recent earnings results, or overall fundamentals.</p>\n<p>The long-term growth outlook has gotten better, not worse.</p>\n<p>While BABA will always be an inherently speculative company, for those comfortable with the risk profile, a 42% margin of safety more than compensate for the risks you're facing.</p>\n<p>In the coming years, BABA has the potential to deliver Buffett-like returns that are almost 6X the risk-adjusted returns of the S&amp;P 500.</p>\n<p>Eventually, the cash pile will grow so large, the company will be forced to start buying back stocks and paying dividends.</p>\n<p>A modest investment in BABA today could fund a comfortable or even lavish retirement purely from future dividends in a few decades.</p>\n<p>Prudent long-term investors know that through a disciplined application of financial science we never have to pray for luck. We make our own luck over time.</p>\n<p>When it comes to Alibaba, as close to a perfect hyper-growth blue-chip investment as exists on Wall Street today, the time to make our own luck is now.</p>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>6 Reasons Alibaba Is Set To Soar And Too Cheap To Ignore</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\n6 Reasons Alibaba Is Set To Soar And Too Cheap To Ignore\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-03-02 20:17 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4410621-six-reasons-alibaba-is-too-cheap-to-ignore><strong>Seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nRising interest rates have caused a modest dip in stocks, and a pullback in tech stocks. Some individual companies have fallen into bear markets.\nAlibaba represents one of the highest quality...</p>\n\n<a href=\"https://seekingalpha.com/article/4410621-six-reasons-alibaba-is-too-cheap-to-ignore\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"BABA":"阿里巴巴","09988":"阿里巴巴-W"},"source_url":"https://seekingalpha.com/article/4410621-six-reasons-alibaba-is-too-cheap-to-ignore","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1169004570","content_text":"Summary\n\nRising interest rates have caused a modest dip in stocks, and a pullback in tech stocks. Some individual companies have fallen into bear markets.\nAlibaba represents one of the highest quality (though speculative) hyper-growth blue-chips you can buy today. It began the tech pullback highly undervalued and is now 42% undervalued.\nPost earnings, when management updated analysts on regulatory risks, the LT growth consensus from all 59 analysts went up from 22.3% to 26.0% CAGR. The growth outlook has improved.\nYet BABA is now trading at some of the lowest valuations in its history, resulting in 27% CAGR consensus return potential through 2027, and 6X the risk-adjusted expected returns of the S&P 500 for the next five years.\nThanks to the potential to become one of the best dividend growth blue-chips of tomorrow, I've invested almost $50,000 into BABA, and am willing to invest up to $100K if it keeps falling in the short term. For those comfortable with the complex risk profile of this company, and who use proper diversification and prudent risk management, BABA represents a potentially life-changing and rich retirement dream-making long-term investment opportunity.\nThis idea was discussed in more depth with members of my private investing community, The Dividend Kings.Get started today »\n\nIt's been a volatile few weeks for stocks, but tech stocks in particular.\nWhile the S&P 500 is just barely off its recent all-time highs, the Nasdaq has fallen 6%. And of course, it's a market of stocks, not a stock market. Individual tech stocks are in corrections or even bear markets.\n\ntech stocks in general, are now in a pullback\ninduced by rising rate concerns\n\nWhy Rising Rates Are NOT A Concern For Prudent Long-Term Investors\nIn the modern era, primarily the last 25 years, all stocks have done well in rising long-term rate environments.\n(Source: Ben Carlson)\n\ngrowth, value, small, large, didn't matter, stocks went up as rates rose\n\n\nA study from JPMorgan(NYSE:JPM)found that from 1963 through 2019 stocks generally went up as long as 10-year yields were under 5%.\nGoldman Sachs'(NYSE:GS)head of quantitative research finds that the rate of interest rate is more important than the actual rate itself\n37+ basis points per month is the tipping point strongly correlated with short-term corrections\nin the last month, 10-year yields are up 39 basis points\na level that is historically correlated with mild and short market declines\nin other words, this stock market dip is 100% normal and expected by prudent investors who understand market history\n\nEven so-called \"bond alternatives,\" such as REITs, are not hurt by rising long-term rates.\n\nFrom 1972 to 2018 the % of REIT total returns explained by 10-year yields was just 2%\nhad you been able to predict interest rates with perfect precision, you couldn't have predicted actual REIT returns\n\nPrudent long-term investors know that you don't actually have to predict interest rates to be successful.\n\nlong-term interest rates are just one of many factors that determine company success over time\nand have a relatively small impact on fundamental growth rates\nbond prices are 100% a function of credit quality and LT interest rates\nstock prices are 91% a function (over the long-term) of fundamentals and valuations\nother than generating income, stocks and bonds are different asset classes that are nothing alike\nno stock is EVER a true \"Bond alternative\" because of this fundamental fact\n\n\n\nIf you focus on the trinity of yield + growth + valuation you are optimizing the fundamentals that drive 91% of long-term stock returns.\n\ncombining the 3 core fundamentals of long-term total returns with prudent risk management = practicing disciplined financial science\n\nMy Personal Phoenix Retirement Portfolio Fundamentals (75% Dividend Stocks/25% Growth Stocks)\n\naverage quality: 10.7/12 SWAN vs. 10.9 average aristocrat\naverage safety score: 4.8/5 very safe vs. 4.7 average aristocrat\naverage credit rating: A- stable vs. A- stable average aristocrat (2.5% 30-year bankruptcy risk)\nthe yield on cost: 3.8%\ncurrent yield: 3.3% vs. 1.6% S&P, 2.1%dividend aristocrats (our equity benchmark) and1.8% a 60/40 stock/bond portfolio\nMorningstar long-term growth forecast: 16.2% CAGRvs. 6.4% S&P 500 & 7.0% dividend aristocrats\nDividend growth forecast: 7.0% CAGR= almost 4X the rate of inflation, double every decade (every 15-years in inflation-adjusted dollars)\nweighted average forward PE: 16.6 vs. 18.9 historical norm vs. 21.9 S&P 500\naverage discount to fair value (Morningstar estimate): 12%vs. -32% S&P 500 and -13% aristocrats\n5-year analyst consensus total return potential: 3.3% yield + 16.2% CAGR long-term growth +2.6% CAGR valuation boost =22.1%CAGRvs. 6.5% S&P 500\nRisk-Adjusted Expected Return: 16.2% CAGRvs. 4.0% CAGR S&P 500 (4.0X market's expected return)\nLT Consensus Total Return Potential:3.3% yield on cost + 16.2% growth =19.5% CAGRvs. 8.0% S&P 500 and 9.1% dividend aristocrats\n\nHow does a double the market's yield and LT growth consensus sound?\nHow about the potential to quadruple the S&P 500's returns over the next five years and more than double the market's long-term consensus return potential?\nYou can't find that in any index fund, you have to build yourself. That's what DK Phoenix has been doing for almost a year, via a combination of opportunistic limit buying and dollar-cost averaging.\n\nI've invested about $500,000 of my life savings into the DK Phoenix strategy\nI'm definitely eating my own cooking\n\nThe results so far have been spectacular. 40% gains from a portfolio that started out 100% bonds and has been buying every single day, including during record highs and overvalued markets.\nMore importantly, this portfolio is generating an ocean of very safe, and steadily growing dividends.\n\nduring the Great Recession S&P 500 dividends down 25%\nthis portfolio's dividends were flat\n\nHowever, I want to point out how the potential combination of strong yield + fantastic growth potential and attractive valuations means this portfolio is potentially set up for returns on par with the greatest investors in history.\n\nBut not from some complex or risky asset you have to manage and tie up your money in for seven to 15 years (as with hedge funds), but a 100% liquid world-class blue-chip investment.\n\nblue-chip dividend investing at its finest\nhigh-probability/low risk buys that are 91% likely to meet our goals over the long-term\n\nNote that this portfolio is 25% growth stocks, though every growth company is one I expect to eventually pay a dividend.\nWhether it takes 5 or 50 years doesn't matter to me, because I have 75% of my portfolio generating over $20,000 per year in very safe income that rises in any economic or market condition.\nWhy I'm Backing Up The Truck On Alibaba In This Tech Pullback\nMy personal Phoenix retirement portfolio is what tracks every Dividend Kings Daily Blue-Chip Deal Video Recommendation.\n\n\nI've bought Alibaba (BABA) 87 times since April 2020\ninvesting a total of about $47,000\nabout 6.9% of my personal Phoenix portfolio (100 companies)\nmy personal risk cap on BABA is $100,000 for the next 20 years, 10X less than what I plan to invest in Amazon(NASDAQ:AMZN)\nmy goal is to invest $1 million into Amazon in my lifetime, as fast as I can\nbut still a potentially life-changing and rich retirement making investment (see reason five)\n\nWhy am I willing to put up to $100,000 of my hard-earned savings to work in this speculative hyper-growth blue-chip?\nFor the same 6 reasons that BABA at today's outrageously attractive valuation might be just what your diversified and prudently risk-managed portfolio needs.\nReason 1: An Extremely High-Quality Company\nThe Dividend Kings motto is \"Quality first and prudent valuation and sound risk management always.\"\nAlibaba Overall Quality: 80% = 10/12 Speculative SWAN\n\n\n\nBABA\nFinal Score\nRating\n\n\nBalance Sheet Safety\n88%\n5/5 Very Safe\n\n\nBusiness Model\n90%\n3/3 Wide and Stable Moat\n\n\nDependability\n68%\n2/4 Above-Average Dependability\n\n\nTotal\n80%\n10 (SWAN) - Speculative\n\n\n\n(Source:Dividend Kings Safety & Quality Tool) updated at the start and end of each day\n\nunchanged from last quarter\n\nDK overall quality scores factor in about 100 fundamental metrics covering\n\ndividend safety\nbalance sheet strength\nshort and long-term bankruptcy risk\naccounting and corporate fraud\nprofitability and business model\nlong-term sustainability\nmanagement quality\ndividend friendly corporate culture/income dependability\n\nAlibaba Is the 136th Highest Quality Master List Company (Out of 490)\n\n(Source: DK Safety & Quality Tool) updated at the end of each day, sorted by overall quality score\nThe DK Master List includes every dividend aristocrat, king, champion, and 12/12 Ultra SWAN quality company. Among the highest quality companies on earth, BABA ranks 136th.\nAlibaba's 80% quality score means its similar in quality to such 10/12 SWANs, 11/12 Super SWANs, and 12/12 Ultra SWANs as\n\nGeneral Dynamics (GD): non-speculative dividend aristocrat\nsalesforce.com (CRM): non - speculative hyper-growth\nRoyal Bank of Canada (RY): non - speculative\nUnitedHealth Group (UNH): non - speculative\nFacebook (FB): non - speculative hyper-growth\nCisco (CSCO): non - speculative\nMagellan Midstream Partners (MMP) - non-speculative\nLockheed Martin (LMT) - non -speculative\nTexas Instruments (TXN) - non-speculative\nBritish American Tobacco (BTI) - non-speculative\n\nAll told, our quality score includes 137 fundamental metrics pertaining to dividend safety, long-term dependability, and total returns. Every metric was selected based on\n\ndecades of empirical data\nthe experience of the greatest investors in history\neight rating agencies\nand what blue-chip economists and analyst firms consider most closely correlated to a company's long-term success.\n\nOur goal is to ensure we see fundamental deterioration coming before dividends get cut and a company, in a worst-case scenario, goes bankrupt.\n\neven dividend aristocrats can fail (just ask GE or CTL investors)\neven dividend aristocrats can go bankrupt (just ask Kmart or Winn-Dixie investors)\n\nThere are no sacred cows in the Dividend Kings universe. Where the fundamentals lead we always follow.\n\nthe essence of financial science\n\nReason 2: Remarkable Long-Term Growth Potential\n\n(Source: FactSet Research Terminal)\n\naccording to FactSet the median LT growth consensus from all 59 analysts that cover BABA is 26.0% CAGR\ncollectively these 59 experts know BABA better than anyone other than management\npre-earnings growth consensus was 22.3%\n\n\n\nYCharts LT growth consensus is less bullish but still showing 20% hyper-growth\n\n\n(Source: FAST Graphs, FactSet Research)\n\n5 analyst median FAST Graphs consensus is 25.3% CAGR LT growth\n\nAlibaba Medium-Term Growth Consensus\n\n\n\nMetric\nFiscal 2021 Consensus\n2022 consensus growth\n2023 consensus growth\n2024 consensus growth\n2025 consensus growth\n2026 consensus growth\n\n\nEPS\n39%\n15%\n24%\n23%\n20%\n16%\n\n\nOwner Earnings (Buffett smoothed out FCF)\n-3%\n162%\nNA\nNA\nNA\nNA\n\n\nOperating Cash Flow\n45%\n11%\n18%\n29%\nNA\nNA\n\n\nFree cash flow\n52%\n-1%\n25%\n24%\nNA\nNA\n\n\nEBITDA\n58%\n24%\n23%\nNA\nNA\nNA\n\n\nEBIT (operating profit)\n29%\n40%\n30%\nNA\nNA\nNA\n\n\n\n(Source: FAST Graphs, FactSet Research Terminal)\n20% to 26% CAGR LT growth consensus is one of the fastest of any company on earth, much less a $650 billion behemoth like BABA.\nWhere is BABA's remarkable growth expected to come from?\n\n(Source: earnings presentation)\n\nAlibaba has almost 1 billion users\nand is one of the fastest-growing cloud computing companies on earth\n#1 in cloud computing in China\n\n\n(Source: earnings presentation)\n\nAlibaba is the Amazon/Alphabet/Facebook/PayPal/Microsoft of China\nit's basically a superior quality Chinese Nasdaq index\njust as Amazon is a superior quality alternative to the US Nasdaq\nexcept that BABA has even more optionality than Amazon courtesy of several\"Super Apps\"of which the US has no equivalent\nSuper Apps are basically all the apps you use on a daily basis in one, and in China, they dominate the lives of almost 1.5 billion people\necosystems of steroids, and the ultimate wide-moat businesses\nthe only effective limitation is government regulations (more on this in the risk profile)\n\n\n(Source: FactSet Research Terminal)\n\n27% annualized revenue growth through 2026\nvs. 19% for Amazon\n34% CAGR cloud computing revenue growth\ncore Chinese commerce sales growth 28% CAGR\n\nWith almost 1.5 billion Chinese consumers to tap into, Alibaba's growth runway is very long.\n\nits optionality is among the best of any company on earth\npotentially superior to even Amazon's\n\nAlibaba Consensus Profitability Forecast\n\n\n\nYear\nSales\nFCF\nEBITDA\nEBIT\nNet Income\n\n\n2020\n$71,376\n$18,634.0\n$22,077.0\n$12,803.0\n$20,902.0\n\n\n2021\n$109,049.0\n$30,666.0\n$32,294.0\n$18,332.0\n$26,210.0\n\n\n2022\n$142,453.0\n$33,923.0\n$40,043.0\n$24,985.0\n$27,169.0\n\n\n2023\n$172,942.0\n$39,671.0\n$49,694.0\n$33,156.0\n$34,068.0\n\n\n2024\n$215,267.0\n$45,789.0\n$59,475.0\n$43,961.0\n$43,031.0\n\n\n2025\n$264,808.0\nNA\n$72,896.0\n$57,133.0\n$54,736.0\n\n\n2026\n$296,476.0\nNA\n$95,192.0\n$70,453.0\n$63,654.0\n\n\n\n\n\n\nYear\nFCF Margin\nEBITDA Margin\nEBIT Margin\nNet Margin\n\n\n2020\n26.1%\n30.9%\n17.9%\n29.3%\n\n\n2021\n28.1%\n29.6%\n16.8%\n24.0%\n\n\n2022\n23.8%\n28.1%\n17.5%\n19.1%\n\n\n2023\n22.9%\n28.7%\n19.2%\n19.7%\n\n\n2024\n21.3%\n27.6%\n20.4%\n20.0%\n\n\n2025\nNA\n27.5%\n21.6%\n20.7%\n\n\n2026\nNA\n32.1%\n23.8%\n21.5%\n\n\n\n(Source: FactSet Research Terminal)\n\nAlibaba is still relatively early in its growth cycle\ninvesting very heavily into R&D and growth capex: $12.6 billion in 2020\n$37.2 billion growth spending consensus in 2026\nyet analysts expect already impressive profitability to remain relatively stable during the next five years\n\nAlibaba Consensus Potential Future Dividend Forecast\n\n\n\nYear\nFCF/Share Consensus\nDividend Per Share (50% Payout Ratio)\nYield On Today's Cost\nConsensus Yield Potential\n2026 Consensus Price\n\n\n2020\n$6.98\n$3.49\n1.47%\nNA\nNA\n\n\n2021\n$8.95\n$4.48\n1.88%\n1.39%\n$323.00\n\n\n2022\n$10.70\n$5.35\n2.25%\n1.41%\n$379.00\n\n\n2023\n$13.84\n$6.92\n2.91%\n1.48%\n$466.00\n\n\n\n(Source: FactSet Research Terminal)\n\nif Alibaba were to start paying 50% of its FCF as dividends then by 2023 that would equal a yield on cost of almost 3% and 1.5% consensus yield\n\nWhy do I expect BABA to eventually start paying dividends?\nAlibaba Consensus Balance Sheet Forecast\n\n(Source: FactSet Research Terminal)\n\ndespite spending $37 billion to fund growth in 2026, analysts expect BABA to end fiscal 2026 with $275 billion in cash and $260 billion in net cash\nmore than Apple(NASDAQ:AAPL)had when it started buying back stock and paying dividends\n\nWhat's more, by 2024 alone analysts expect BABA's annual free cash flow to reach $46 billion.\n\n(Source: FactSet Research Terminal)\n\nif FCF grows at the 26% LT EPS growth consensus rate then by 2026 $73 billion in annual free cash flow\n\nThe bottom line on BABA is that it's the #1 global digital retailer but so much more. And it has the potential to make patient long-term investors extremely wealthy and eventually fund comfortable retirements from future dividends alone.\n\nwhat I call my \"Jack Ma retirement plan\"\n\nYet despite this incredible quality and growth potential, the market is mispricing BABA to a remarkable degree right now.\nReason 3: One Of Most Undervalued Tech Stocks In The World\n\n\n\nMetric\nHistorical Fair Value Multiples (all-years)\nFiscal 2021\nFiscal 2022\nFiscal 2023\n\n\nEarnings\n32.2\n$334\n$386\n$480\n\n\nOwner Earnings (Buffett smoothed out FCF)\n24.6\n$218\n$572\nNA\n\n\nOperating Cash Flow\n23.1\n$325\n$362\n$428\n\n\nFree Cash Flow\n30.7\n$338\n$336\n$421\n\n\nEBITDA\n33.2\n$389\n$485\n$597\n\n\nEBIT (operating income)\n45.1\n$298\n$416\n$541\n\n\nAverage\n$307\n$413\n$485\n\n\nCurrent Price\n$237.76\n\n\nDiscount To Fair Value\n23%\n42%\n51%\n\n\nUpside To Fair Value\n29%\n74%\n104%\n\n\nAnnualized Total Return Potential\nNA\n74%\n46%\n\n\n\n(Source: F.A.S.T. Graphs, FactSet Research)\nBABA is trading at a 42% discount to fiscal 2022 consensus fundamentals (which ends March 2022)\n\nA return to average historical fair value by the end of March 2023 would result in a 46% CAGR total return\n2021 fair value range: $336 to $572\n2021 Harmonic Average Fair Value (smooths out outliers): $413\n\nEven using the most conservative fair value of $336, BABA is still 29% undervalued and a potentially good speculative buy.\n(Source: FAST Graphs, FactSet Research)\n\non a blended PE basis, BABA is now tied for the lowest valuation in its history on the NYSE\nin other words, if you've ever wanted to buy BABA, now is the time\nvery likely to be near its eventual bottom\n\nI know that a lot of readers are now thinking \"sure, consensus estimates say BABA is a growth powerhouse, BUT what if analysts are wrong.\"\nThere is one thing we know for certain about all growth consensus estimates.\n\nthey are wrong\nthe question is how much\n\nAlibaba Analyst Scorecard\n\n\nDespite a highly complex business model analysts are relatively good at forecasting BABA's growth. Specifically, the company has only missed two-year earnings growth forecasts twice out of the six years that analysts have offered them.\n\nthe margin of error 20% to the upside and downside (modern era with lots of analyst coverage)\nlong-term growth consensus range: 20.0% to 26% CAGR\nlong-term growth consensus (from all 60 analysts ): 25.3% CAGR\nthe margin of error adjusted long-term growth consensus range: 16% to 32% CAGR\n\n\n(Source: F.A.S.T. Graphs, FactSet Research)\nThe current analyst consensus of 26.0% CAGR is similar to the growth rate of the last five years. The historical growth range since BABA came to the NYSE is 20% to 44% CAGR.\nThe secular growth catalysts represented by BABA's dominance in Chinese digital payments, banking, cloud computing, online retail, digital marketing, etc., means that I consider the analyst growth consensus range reasonable and achievable.\nStricter regulations are not expected to hamper BABA's growth significantly, according to the 60 analyst median consensus.\nReason 4: Total Return Potential That Could Make You Rich\n\nfor non-dividend stocks, total returns generated from growth and valuation mean reversion is the entire point for most investors\nBABA's consensus return potential is outstanding\n\nBABA 2023 Consensus Return Potential\n\n(Source: F.A.S.T. Graphs, FactSet Research)\nIf BABA grows as analysts expect through March 2023, and returns to historical fair value, then investors could expect\n\n102% total returns\n39.9% CAGR returns\nvs. 2.9% CAGR S&P 500\n14X better than the S&P 500\n\nAlibaba March 2027 Consensus Return Potential\n\n(Source: F.A.S.T. Graphs, FactSet Research) - actual consensus EPS estimates through 2026\nIf BABA grows as analysts expect through March 2027, and returns to historical fair value, then you could expect\n\n324% total returns, more than quadrupling your investment\n26.8% CAGR returns\nvs. 6.5% CAGR S&P 500\n\nOver the very long term, here's what analysts expect.\n\n0% yield + 26.0% CAGR growth = 26.0% CAGR total returns (16% to 32% CAGR range)\nvs. 8.0% CAGR S&P 500 and 9.1% CAGR dividend aristocrats\n\nReason 5: Total Return Potential That Could Turn Thousands Into Tens Of Millions Over Decades\nWhat does potential hyper-growth sustained over many years and decades look like? Generation wealth, that can not just fund your rich retirement, but that of your children and grandchildren as well.\nAlibaba 30-Year Monte Carlo Simulation, Statistical Inflation+ Tax Adjusted Total Return Forecast\n\n\n\nMonte Carlo simulation results for 5000 portfolios with $1,000 initial portfolio balance using available statistical model data from Jan 2015 to Dec 2020.Returns were modeled as correlated random samples from a multivariate normal distribution.The historical pre-tax return for the selected portfolio for this period was 21.09% mean return (14.38% CAGR) with a 36.62% standard deviation of annual returns.The simulated asset returns were adjusted based on provided tax assumptions.The simulated inflation model used historical inflation with a 1.75% mean and 0.94% standard deviation based on the Consumer Price Index (CPI-U) data from Jan 2015 to Dec 2020.The generated inflation samples were correlated with simulated asset returns based on historical correlations.The available historical data for the simulation inputs was constrained by Alibaba Group Holding Limited (BABA) [Oct 2014 - Feb 2021]. (Source: Portfolio Visualizer)\n\nBABA's historical returns are depressed because it's currently in a bear market. Yet even if it delivers historical returns over the next 30 years, the standard retirement time frame there is an 80% statistical probability that\n\n$1,000 invested today becomes $6,500 to $324,000\nadjusted-for inflation and taxes\nassuming top tax bracket, including for my home state of MN\n\nWhat if BABA is able to sustain approximately 15% CAGR growth for longer than 30 years? Then a modest investment today could transform into generation wealth.\nAlibaba 75-Year Monte Carlo Simulation, Statistical Inflation+ Tax Adjusted Total Return Forecast\n(Source: Portfolio Visualizer)\n\nwith a $75,000 total investment, made at the best valuations in five years, there is a very good statistical chance that I will eventually become an Alibaba millionaire\nthere is a decent chance that my children and grandchildren will be Alibaba billionaires\n\nReason 6: One Of The Most Reasonable And Prudent Growth Stocks You Can Buy Today\nI never recommend a company, much less put my own money at risk, without first knowing exactly how prudent a potential investment it is relative to the S&P 500, most people's default alternative.\n\nThe investment decision score is based on valuation and the three core principles of all successful long-term investors.\n\n\n\n\n\n\n\n(Source:Dividend Kings Automated Investment Decision Tool)\nBABA is one of the most reasonable and prudent hyper-growth stocks you can buy today. It offers\n\nobjectively superior quality to the average S&P 500 company (credit ratings and ROC)\nmuch faster growth (3 to 4X faster)\nmuch superior valuation (mirror image of the S&P 500)\n6X the 5-year risk-adjusted expected returns\n\nThat's assuming you're\n\ncomfortable with the risk profile (see dive section)\nown it within a diversified and prudently risk-managed portfolio\n\nAlibaba Risk Profile: Why BABA Isn't Right For EveryoneFundamental Risk Summary\n\n In our view, the most pressing risks to the Alibaba investment thesis are a sustained slowdown in Chinese consumption patterns, e-commerce competition, increased regulatory scrutiny, and the possibility that ancillary businesses divert management's attention and reduce profitability.China's e-commerce landscape has become increasingly competitive, with Pinduoduo registering faster GMV and user growth than Alibaba with the support of Tencent's traffic and its group-buying traffic generation method, and JD.com positioning itself as a credible rival through its fulfillment capability, quality assurance, and its partnerships with Tencent. These platforms do not yet have Alibaba's scale in China, but they specialize in specific products or services, or markets, which might impede Alibaba's growth.Alibaba is also subject to increased online and mobile payment regulation. Financial regulators in China have continuously scrutinized online and mobile payment services. Alibaba has persistently faced the issue of counterfeit and infringing goods on its marketplaces. Hangzhou government's assigning of representatives to work inside Alibaba also raise concerns of some investors, although there is no evidence of consequence of value destruction for Alibaba.Expansion into peripheral businesses might distract management, reduce profitability without materially improve Alibaba's ecosystem. While we're optimistic about Alibaba's ability to become a preferred partner for international retailers and consumer brands looking to sell in China, the firm does not enjoy the same network effect and brand recognition in other countries, and it may face challenges directly expanding in these markets...Like many other Chinese Internet companies listed in overseas markets, Alibaba operates under a\n variable interest entity, or VIE, structuredesigned to let companies bypass Chinese legal restrictions on foreign ownership in certain sectors.Alibaba's foreign investors will essentially hold shares of Alibaba's VIE domiciled in the Cayman Islands. We don't expect any legal challenges to VIE structures by the Chinese government in the future. However, if the legitimacy of Alibaba's related VIE is found to violate applicable law or regulation, Chinese regulatory authorities might take action against the VIE, including revoking the business and operating licenses of Alibaba's subsidiaries or the VIE, or discontinuing, restricting, or restructuring Alibaba's operations. Since the Chinese Ministry of Commerce has the jurisdiction to regulate VIEs, we believe overseas investors would have limited legal rights...Despite\n management's proven execution capabilities,\n we have concerns regarding Alibaba's corporate governance, which is reflected in our Poor equity stewardship rating.In our view,\n Alibaba is led by a capable and ambitious management team. Founder and former executive chairman Jack Ma has been the keeper of the flame since the company's founding in 1999. Under his leadership, Alibaba has become China's leading e-commerce player, accounting for the majority of transaction volume for China's online shopping industry.Over the past decade, Taobao has transformed the shopping behaviors of millions of Chinese consumers. We believe management has also done a commendable job developing and preserving Alibaba's wide economic moat by building several other leading online marketplaces and platforms such a Tmall, Juhuasuan, Alibaba.com, AliExpress, Alipay, AliCloud, and Ele.me. Although the company faces a potentially uneven long-term economic backdrop and new sources of competition in China,\n we remain confident that Alibaba can sustain its wide economic moat over the long term under its existing leadership.Ma's decision to step away from Alibaba's executive chairman role in 2019 and the company's board of directors will not affect our positive long-term bias for two reasons. First,\n we believe recent results demonstrate that Alibaba has a deep management bench,\n including current CEO Daniel Zhang(who was appointed CEO of Alibaba Group in May 2015, will assume the chairman role in 2019, and played a central role in the development of the Singles Day shopping event, building the Tmall platform from a regional to global business-to-consumer platform, and deploying several of Alibaba's \"New Retail\" strategies) and executive vice chairman Joe Tsai. Second, we believe Ma's involvement with the Alibaba Partnership--a group of core company managers--will allow him to stay involved with key strategic decisions...We harbor concerns about Alibaba's partnership structure, which might jeopardize the board's independence.The partnership is led by a committee of five, including Ma, executive vice chairman Joe Tsai, and CEO Daniel Zhang. The Alibaba Partnership has the exclusive right to nominate or appoint up to a simple majority of the members of its board of directors.Any board candidate it nominates is presented to shareholders for voting. If the candidate is not elected by shareholders, the partnership can appoint another candidate without a vote. That candidate will serve as an interim director until the next annual general meeting, where either the same candidate or yet another nominee proposed by Alibaba partners will stand for election.The current board of directors is composed of 11 directors, five of which are Alibaba Partnership nominees. Alibaba Partnership can also nominate or appoint two additional directors to the board, which would increase the number of directors to 13, and the Partnership will get majority control of the board.\n The Partnership essentially controls the board and limits the influence of outside shareholders.\" - Morningstar (emphasis added)\n\nMSCI, Reuters and Morningstar, as well as S&P, Fitch, and Moody's have concerns about BABA's corporate governance, which is factored into each company's respective rating on BABA's credit and material ESG risk (more on that later).\n\nall Chinese companies are speculative\nthus requiring a 5% higher margin of safety to be a potentially good buy (20% in the case of BABA)\ninvestors not comfortable with BABA's complex risk profile should not own it\nno company is right for everyone\n\nAlibaba ESG Risk Analysis: An Important Component Of A Company's Overall Financial Risk Profile (But Especially For Chinese Tech Companies)\n\ncritically important to anyone concerned about corporate governance and potential accounting fraud\n\nIn today's hyperpolarized political climate, some investors consider ESG to be political/personal ethics/opinion-driven nonsense.\nESG as measured by institutions is NOT simply the concern of \"woke\" and \"on-trend\" hippy millennials trying to virtue signal to impress Silicon Valley venture capitalists or social media followers.\n\n Companies with strong ESG profiles may be better positioned for future challenges and experience fewer instances of bribery, corruption, and fraud.\" - MSCI\n\nAccording to the world's best risk-assessors, ESG metrics are a critical component of a company's overall risk profile. Here's who considers ESG important and builds it into their safety models and ratings.\n\nBlackRock - #1 asset manager in the world\nMSCI - #1 indexing giant\nMorningstar\nReuters/Refinitiv\nISS (Institutional Shareholder Services) - #1 corporate proxy firm on earth\nS&P\nFitch\nMoody's\nDBRS (Canadian credit rating agency)\nAMBest (insurance industry rating agency)\n\nThe reason some investors consider ESG to be political is that some investors consider some industries to be inherently \"evil\" such as tobacco, energy, big tech, pharma, health insurers, fast-food, snack foods, and defense contractors.\n\nsuch opinions are personal and based on individual ethics\nESG scores as calculated by institutions are quantitatively based and focused on only fundamental financial risks to the underlying business\nthey are compared against industry peers and as objective as can be realistically expected\n\nPersonal ethical or political opinions are not what rating agencies or asset managers care about.\nMSCI rates over 2,800 global companies on 37 ESG metrics, using a quantitative and qualitative approach, just as all the rating agencies do, and Ben Graham recommended.\n\n Our global team of 185 experienced research analysts assesses thousands of data points across 37 ESG Key Issues, focusing on the intersection between a company's core business and the industry issues that can create significant risks and opportunities for the company. Companies are rated on an AAA-CCC scale\n relative to the standards and performance of their industry peers...\n\n\n\n The MSCI ESG rating model seeks to answer four key questions about companies:• What are the most significant ESG risks and opportunities facing a company and its industry?• How exposed is the company to those key risks and/or opportunities?• How well is the company managing key risks and opportunities?• What is the overall picture for the company and how does it compare to its global industry peers?\" - MSCI\n\n\n(Source: MSCI)\nThe ESG scores you find from the best risk-assessors in the world are not opinions based on political correctness.They use a quantitative approach to fundamental company risk analysis.One based on decades of historical data pertaining to minimizing the risk of fundamental deterioration, bankruptcy, and stock/bond investors getting wiped out.\n\nESG risk ratings + trends make up about 20% of the overall DK quality score for most companies that have an ESG rating from MSCI, Morningstar/Sustainalytics, and Reuters/Refinitiv\n\n\n\n(Source: MSCI)\n\nbased on the 12 material sustainability factors MSCI's 185 industry experts believe is important to financial risk for midstream companies, BABA scores are in the bottom 37% of its peers (below average)\nthat score is has been improving over the last four years\nthough it dipped one level in the 2020 annual update\n\nHow Morningstar/Sustainalytics Assesses Long-Term ESG Financial Risk\n\nMorningstar/Sustainalytics cares about material ESG variables that are historically correlated to a company's enterprise value (market cap + net debt)\nFinancial risk NOT political/personal ethical opinions are what Morningstar assesses\n20 fundamental metrics analyzed, compared to industry peers\n100 point risk scale\nlower is better\n\n\n\n\n\n\nEvery controversy surrounding BABA is factored into Morningstar ESG risk rating. That includes the controversies around anti-trust practices for which it's now under investigation by Chinese regulators.\n\nMorningstar considers this to be a medium ESG risk industry\nand management is doing an average job of managing that risk\nMorningstar scores BABA 26.2 \"medium risk\" in the bottom 25% of tech companies and in the top 43% of all 13,645 companies Morningstar rates\nrisk rating increased from 24.6 to 26.2 in the past year due to increasing regulatory concerns\n\nReuters/Refinitiv also provides ESG financial risk ratings.\n\nover 150 industry experts covering over 7,000 global companies\nbased on 400+ fundamental metrics\nand 178 materially important financial ESG risk factors\n\n\n\n\n(Source: Refinitiv)\n\n(Source: Interactive Brokers)\n\nReuters ranks BABA as in the bottom 30% of its peers on actual financial ESG risk\nin the top 40% in terms of environmental issues\nbottom 30% for social\nbottom 20% for corporate governance\nand near the very bottom of its industry on controversies\nfor a combined score that's in the bottom 10% of its peers\nwhich is why BABA's dependability score fell from 75% to 68% and resulted in a downgrade from 11/12 to 10/12 speculative quality (about two months ago)\nand why I'm looking to invest a maximum of $100K into BABA vs. $1 million into far lower risk Amazon\nrisks with BABA are far higher than with AMZN\n\nWhen no less than 10 of the world's most reputable risk assessors say something is important to long-term financial risk for a company you can be sure that Dividend Kings will include it in our 61 metric safety model and 126 point quality score (converted to a 100% scale).\n\nthere is no such thing as a \"risk-free\" company\nfactoring in all material financial risks is how you determine whether a company is appropriate for your needs\nand how we determine the margin of safety required to compensate us for that risk and thus determine potentially good buy prices or better\nno average investor can ever be a true expert on a company\nbut DK knows where to find the most reliable expert data to create a comprehensive safety, dependability, and quality score that includes every major risk factor a company has\n\nNo less than Ben Graham, the father of securities analysis considered qualitative factors critical to making prudent long-term investing decisions.\n\n... a satisfactory statistical exhibition is a necessary though by no means a sufficient condition for a favorable decision by the analyst.\"-Benjamin Graham, Security Analysis (1951 ed.), Page 76\n\nIn other words, Graham considered a combination of quantitative and qualitative analysis, looking at the past, present, and likely future, to be the optimal strategy for making sound long-term investments.\n\nDividend Kings uses risk ratings from eight of the world's most reputable agencies\nif fundamentals weaken our model will know it and our scores, ratings, and recommendations will change accordingly\n\nBottom Line: Alibaba Is Set To Soar And Too Cheap To Ignore\nI can't tell you what any stock will do over the next few weeks, months or even a year or two.\n\naccording to JPMorgan Asset Management, 92% of 12-month returns are a function of luck\nover 10+ years 90% to 91% of returns are a function of fundamentals\nover the long-term fundamentals are 11X as powerful as luck\n\nAlibaba represented one of the most undervalued hyper-growth tech blue-chips before this interest rate pullback in tech began.\nAlibaba's recent decline has been sharper than many peers, which isn't justified by its recent earnings results, or overall fundamentals.\nThe long-term growth outlook has gotten better, not worse.\nWhile BABA will always be an inherently speculative company, for those comfortable with the risk profile, a 42% margin of safety more than compensate for the risks you're facing.\nIn the coming years, BABA has the potential to deliver Buffett-like returns that are almost 6X the risk-adjusted returns of the S&P 500.\nEventually, the cash pile will grow so large, the company will be forced to start buying back stocks and paying dividends.\nA modest investment in BABA today could fund a comfortable or even lavish retirement purely from future dividends in a few decades.\nPrudent long-term investors know that through a disciplined application of financial science we never have to pray for luck. We make our own luck over time.\nWhen it comes to Alibaba, as close to a perfect hyper-growth blue-chip investment as exists on Wall Street today, the time to make our own luck is now.","news_type":1},"isVote":1,"tweetType":1,"viewCount":520,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":160160462,"gmtCreate":1623775096756,"gmtModify":1703819179399,"author":{"id":"3574558286837472","authorId":"3574558286837472","name":"Mxtinhzq","avatar":"https://static.tigerbbs.com/c915c3b8303c6bd800f52c911a79390f","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3574558286837472","authorIdStr":"3574558286837472"},"themes":[],"htmlText":"Too much Nio noises what about Xpeng? It’s doing just as well. Rooting for Xpeng","listText":"Too much Nio noises what about Xpeng? It’s doing just as well. Rooting for Xpeng","text":"Too much Nio noises what about Xpeng? It’s doing just as well. Rooting for Xpeng","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/160160462","repostId":"1146386859","repostType":2,"repost":{"id":"1146386859","kind":"news","pubTimestamp":1623417074,"share":"https://ttm.financial/m/news/1146386859?lang=&edition=fundamental","pubTime":"2021-06-11 21:11","market":"us","language":"en","title":"NIO: Buy This Chinese EV Manufacturer While It's Still Cheap","url":"https://stock-news.laohu8.com/highlight/detail?id=1146386859","media":"seekingalpha","summary":"NIO is a dominant EV manufacturer in the electric SUV segment in China.Despite competing in the luxurious SUV segment, its cars are more affordable in comparison to the cars of its peers such as Tesla.As the Chinese EV market will continue to aggressively expand in the upcoming years, we believe that NIO has all the chances to create additional shareholder value in the future.Founded in 2014, NIO is an electric vehicle manufacturer that's headquartered in Shanghai, China. The company mostly spec","content":"<p><b>Summary</b></p>\n<ul>\n <li>NIO is a dominant EV manufacturer in the electric SUV segment in China.</li>\n <li>Despite competing in the luxurious SUV segment, its cars are more affordable in comparison to the cars of its peers such as Tesla.</li>\n <li>As the Chinese EV market will continue to aggressively expand in the upcoming years, we believe that NIO has all the chances to create additional shareholder value in the future.</li>\n</ul>\n<p>NIO(NYSE:NIO)is a dominant EV manufacturer in the electric SUV segment in China. It has been constantly increasing its deliveries every quarter, its revenues have been growing at a triple-digit rate in recent years, and despite competing in the luxurious SUV segment, its cars are more affordable in comparison to the cars of its peers such as Tesla(NASDAQ:TSLA). While NIO's stock has depreciated last month, there's every reason to believe that its growth story is far from over, as the Chinese EV market will continue to aggressively expand in the upcoming years and the penetration of electric vehicles on its roads is only going to increase. Considering this, the company has all the chances to create additional shareholder value in the long run.</p>\n<p><b>Dominating the Chinese Market</b></p>\n<p>Founded in 2014, NIO is an electric vehicle manufacturer that's headquartered in Shanghai, China. The company mostly specializes in the development of luxurious electric SUVs and just likeXPeng(XPEV), it manufactures and sells its cars online and through its showrooms across China. In addition, NIO also offers various energy-related solutions such as home charging stations, mobile charging services, and others to its customers.</p>\n<p>In recent years, the company has been aggressively growing, as the deliveries of its cars have been steadily increasing quarter after quarter, which led to the appreciation of its stock. However, due to the overall market selloff last month, NIO's stock along with stocks of other EV manufacturers such as XPeng, Tesla, and Li Auto (LI) evaporated most of its YTD gains and are currently underperforming the S&amp;P 500 Index.</p>\n<p><img src=\"https://static.tigerbbs.com/23b2ed509a529a876c423f3e9426be3f\" tg-width=\"1280\" tg-height=\"443\" referrerpolicy=\"no-referrer\"></p>\n<p><i>Chart: Seeking Alpha</i></p>\n<p>Despite this, there's every reason to believe that NIO's stock will recover, as the company's successful performance in Q1 shows that its growth story is far from over. InQ1alone NIO beat the Street expectations by $160 million and generated $1.22 billion in revenues, which represents an increase of 481.8% Y/Y. In addition, the company's gross profit was $237.3 million, while its vehicle margin was 21.2% against -7.4% a year ago. During the period, NIO has also improved its bottom-line performance, as its net loss was only $68.8 million, and despite the chip shortages and the Chinese New Year its deliveries have also increased by 422.7% Y/Y and by 15.6% Q/Q to 20,060.</p>\n<p>One of the best things about NIO is that it already has a dominant position in the Chinese EV industry and it also has a solid balance sheet, as its cash reserves at the end of Q1stoodat $7.2 billion, while it had only $1.59 billion in long-term debt. As a result, it can easily reinvest its resources back into the business to drive growth and establish an even stronger foothold in its home market without worrying too much about the current losses.</p>\n<p>On top of that, while some might say that by trading at a price-to-salesratioof ~13x NIO is overvalued, the reality is that its momentum is not slowing down and there's every reason to believe that the growth story is far from over. Considering that even at the market cap of ~$70 billion NIO still trades below the Streetconsensusprice of $59.24 per share, it's safe to assume that the upside is still there, especially since the current forecasts suggest that the company will increase its revenues from $2.49 billion in FY20 to $8.81 billion in FY22.</p>\n<p><img src=\"https://static.tigerbbs.com/71905e5a90565b6a7e8864b3f6b0c226\" tg-width=\"883\" tg-height=\"382\" referrerpolicy=\"no-referrer\"></p>\n<p><i>Source: Seeking Alpha</i></p>\n<p>At this stage, the major competitor of NIO's flagship SUVES8is Tesla's Model X. However, there are several reasons to believe that the ES8 is a more attractive car in comparison to the Model X, and as a result, NIO has all the opportunities to outsell its competitor in China in the long run. First of all, the ES8 has more legroom and headroom than the Model X, it also has a luxurious interior, and it comes with three different battery packages that could last from 415 kilometers to 580 kilometers on a single charge.</p>\n<p>All of the ES8 SUVs include a proprietary operating system, have advanced navigation software, and most importantly cost ~$70,000 per vehicle in China, which is below the cost of Tesla's Model X, which comes at a price tag of ~$110,000 per vehicle in the region. We believe that this pricing advantage will undoubtedly help NIO to outsell Tesla in the SUV segment, especially since its cars now could bepurchasedat a discount thanks to the new Chinese subsidy program.</p>\n<p>Another uniqueness of NIO is its battery as a service business model, which allows its customers to swap their batteries in various swapping stations around China if they don't want to charge their cars or are in a hurry. After recently deploying the second version of its Power Swap stations, the swapping of batteries is now done in under three minutes, which is the same as refueling a traditional ICE car, and a single station now could perform up to 312 battery swaps in a single day. NIO now has a network of charging stations across all of China and if the solid-state batteries won't be available by the end of the decade at scale, then the idea of swapping batteries on the go will remain a viable business model in the long run.</p>\n<p>Going forward, NIO plans to accelerate its deliveries this month in order to meet its Q2 goal of delivering 21,000 to 22,000 vehicles, which represents a growth of 103% Y/Y to 113% Y/Y and plans to generate $1.24 to $1.29 billion in revenues during the period. Despite the semiconductor shortages, NIO already managed to increase its deliveries in April and May to 7,102 vehicles and 6,711 vehicles, respectively, which represents a growth of 125% Y/Y and 95.3% Y/Y, respectively. On top of that, NIO is also on track to deliver 90,000 to 100,000 vehicles this year.</p>\n<p>Considering this, there's every reason to believe that NIO will continue to be a dominant player in the Chinese EV market and a leader of the luxury EV segment in the region. While the company doesn't have an infrastructure outside China, we don't think that's a downside at all since China is the biggest EV market in the world that's constantly growing and NIO has better chances of creating shareholder value there than abroad. For that reason, we believe that NIO's growth story is far from over and it's likely that as long as its deliveries increase with every quarter, its stock will be rising in value in the long run.</p>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>NIO: Buy This Chinese EV Manufacturer While It's Still Cheap</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nNIO: Buy This Chinese EV Manufacturer While It's Still Cheap\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-06-11 21:11 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4434085-nio-buy-this-chinese-ev-manufacturer-while-its-still-cheap><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nNIO is a dominant EV manufacturer in the electric SUV segment in China.\nDespite competing in the luxurious SUV segment, its cars are more affordable in comparison to the cars of its peers ...</p>\n\n<a href=\"https://seekingalpha.com/article/4434085-nio-buy-this-chinese-ev-manufacturer-while-its-still-cheap\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"NIO":"蔚来"},"source_url":"https://seekingalpha.com/article/4434085-nio-buy-this-chinese-ev-manufacturer-while-its-still-cheap","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1146386859","content_text":"Summary\n\nNIO is a dominant EV manufacturer in the electric SUV segment in China.\nDespite competing in the luxurious SUV segment, its cars are more affordable in comparison to the cars of its peers such as Tesla.\nAs the Chinese EV market will continue to aggressively expand in the upcoming years, we believe that NIO has all the chances to create additional shareholder value in the future.\n\nNIO(NYSE:NIO)is a dominant EV manufacturer in the electric SUV segment in China. It has been constantly increasing its deliveries every quarter, its revenues have been growing at a triple-digit rate in recent years, and despite competing in the luxurious SUV segment, its cars are more affordable in comparison to the cars of its peers such as Tesla(NASDAQ:TSLA). While NIO's stock has depreciated last month, there's every reason to believe that its growth story is far from over, as the Chinese EV market will continue to aggressively expand in the upcoming years and the penetration of electric vehicles on its roads is only going to increase. Considering this, the company has all the chances to create additional shareholder value in the long run.\nDominating the Chinese Market\nFounded in 2014, NIO is an electric vehicle manufacturer that's headquartered in Shanghai, China. The company mostly specializes in the development of luxurious electric SUVs and just likeXPeng(XPEV), it manufactures and sells its cars online and through its showrooms across China. In addition, NIO also offers various energy-related solutions such as home charging stations, mobile charging services, and others to its customers.\nIn recent years, the company has been aggressively growing, as the deliveries of its cars have been steadily increasing quarter after quarter, which led to the appreciation of its stock. However, due to the overall market selloff last month, NIO's stock along with stocks of other EV manufacturers such as XPeng, Tesla, and Li Auto (LI) evaporated most of its YTD gains and are currently underperforming the S&P 500 Index.\n\nChart: Seeking Alpha\nDespite this, there's every reason to believe that NIO's stock will recover, as the company's successful performance in Q1 shows that its growth story is far from over. InQ1alone NIO beat the Street expectations by $160 million and generated $1.22 billion in revenues, which represents an increase of 481.8% Y/Y. In addition, the company's gross profit was $237.3 million, while its vehicle margin was 21.2% against -7.4% a year ago. During the period, NIO has also improved its bottom-line performance, as its net loss was only $68.8 million, and despite the chip shortages and the Chinese New Year its deliveries have also increased by 422.7% Y/Y and by 15.6% Q/Q to 20,060.\nOne of the best things about NIO is that it already has a dominant position in the Chinese EV industry and it also has a solid balance sheet, as its cash reserves at the end of Q1stoodat $7.2 billion, while it had only $1.59 billion in long-term debt. As a result, it can easily reinvest its resources back into the business to drive growth and establish an even stronger foothold in its home market without worrying too much about the current losses.\nOn top of that, while some might say that by trading at a price-to-salesratioof ~13x NIO is overvalued, the reality is that its momentum is not slowing down and there's every reason to believe that the growth story is far from over. Considering that even at the market cap of ~$70 billion NIO still trades below the Streetconsensusprice of $59.24 per share, it's safe to assume that the upside is still there, especially since the current forecasts suggest that the company will increase its revenues from $2.49 billion in FY20 to $8.81 billion in FY22.\n\nSource: Seeking Alpha\nAt this stage, the major competitor of NIO's flagship SUVES8is Tesla's Model X. However, there are several reasons to believe that the ES8 is a more attractive car in comparison to the Model X, and as a result, NIO has all the opportunities to outsell its competitor in China in the long run. First of all, the ES8 has more legroom and headroom than the Model X, it also has a luxurious interior, and it comes with three different battery packages that could last from 415 kilometers to 580 kilometers on a single charge.\nAll of the ES8 SUVs include a proprietary operating system, have advanced navigation software, and most importantly cost ~$70,000 per vehicle in China, which is below the cost of Tesla's Model X, which comes at a price tag of ~$110,000 per vehicle in the region. We believe that this pricing advantage will undoubtedly help NIO to outsell Tesla in the SUV segment, especially since its cars now could bepurchasedat a discount thanks to the new Chinese subsidy program.\nAnother uniqueness of NIO is its battery as a service business model, which allows its customers to swap their batteries in various swapping stations around China if they don't want to charge their cars or are in a hurry. After recently deploying the second version of its Power Swap stations, the swapping of batteries is now done in under three minutes, which is the same as refueling a traditional ICE car, and a single station now could perform up to 312 battery swaps in a single day. NIO now has a network of charging stations across all of China and if the solid-state batteries won't be available by the end of the decade at scale, then the idea of swapping batteries on the go will remain a viable business model in the long run.\nGoing forward, NIO plans to accelerate its deliveries this month in order to meet its Q2 goal of delivering 21,000 to 22,000 vehicles, which represents a growth of 103% Y/Y to 113% Y/Y and plans to generate $1.24 to $1.29 billion in revenues during the period. Despite the semiconductor shortages, NIO already managed to increase its deliveries in April and May to 7,102 vehicles and 6,711 vehicles, respectively, which represents a growth of 125% Y/Y and 95.3% Y/Y, respectively. On top of that, NIO is also on track to deliver 90,000 to 100,000 vehicles this year.\nConsidering this, there's every reason to believe that NIO will continue to be a dominant player in the Chinese EV market and a leader of the luxury EV segment in the region. While the company doesn't have an infrastructure outside China, we don't think that's a downside at all since China is the biggest EV market in the world that's constantly growing and NIO has better chances of creating shareholder value there than abroad. For that reason, we believe that NIO's growth story is far from over and it's likely that as long as its deliveries increase with every quarter, its stock will be rising in value in the long run.","news_type":1},"isVote":1,"tweetType":1,"viewCount":80,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":365994372,"gmtCreate":1614687227396,"gmtModify":1704774012741,"author":{"id":"3574558286837472","authorId":"3574558286837472","name":"Mxtinhzq","avatar":"https://static.tigerbbs.com/c915c3b8303c6bd800f52c911a79390f","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3574558286837472","authorIdStr":"3574558286837472"},"themes":[],"htmlText":"Ok","listText":"Ok","text":"Ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/365994372","repostId":"1134788930","repostType":4,"isVote":1,"tweetType":1,"viewCount":344,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":160185205,"gmtCreate":1623774990207,"gmtModify":1703819175471,"author":{"id":"3574558286837472","authorId":"3574558286837472","name":"Mxtinhzq","avatar":"https://static.tigerbbs.com/c915c3b8303c6bd800f52c911a79390f","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3574558286837472","authorIdStr":"3574558286837472"},"themes":[],"htmlText":"<a href=\"https://laohu8.com/S/AAPL\">$Apple(AAPL)$</a>I sold my apple shares at $126 slow progress. Long term play.","listText":"<a href=\"https://laohu8.com/S/AAPL\">$Apple(AAPL)$</a>I sold my apple shares at $126 slow progress. Long term play.","text":"$Apple(AAPL)$I sold my apple shares at $126 slow progress. Long term play.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/160185205","isVote":1,"tweetType":1,"viewCount":160,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":365935831,"gmtCreate":1614688069823,"gmtModify":1704774024455,"author":{"id":"3574558286837472","authorId":"3574558286837472","name":"Mxtinhzq","avatar":"https://static.tigerbbs.com/c915c3b8303c6bd800f52c911a79390f","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3574558286837472","authorIdStr":"3574558286837472"},"themes":[],"htmlText":"Should have gotten baba at $220 when I stillhad the chance. Nonetheless still great stock to buy for the long haul","listText":"Should have gotten baba at $220 when I stillhad the chance. Nonetheless still great stock to buy for the long haul","text":"Should have gotten baba at $220 when I stillhad the chance. Nonetheless still great stock to buy for the long haul","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/365935831","repostId":"1169004570","repostType":4,"repost":{"id":"1169004570","kind":"news","pubTimestamp":1614687445,"share":"https://ttm.financial/m/news/1169004570?lang=&edition=fundamental","pubTime":"2021-03-02 20:17","market":"us","language":"en","title":"6 Reasons Alibaba Is Set To Soar And Too Cheap To Ignore","url":"https://stock-news.laohu8.com/highlight/detail?id=1169004570","media":"Seekingalpha","summary":"Rising interest rates have caused a modest dip in stocks, and a pullback in tech stocks. Some individual companies have fallen into bear markets.Alibaba represents one of the highest quality  hyper-growth blue-chips you can buy today. It began the tech pullback highly undervalued and is now 42% undervalued.Post earnings, when management updated analysts on regulatory risks, the LT growth consensus from all 59 analysts went up from 22.3% to 26.0% CAGR. The growth outlook has improved.Yet BABA is ","content":"<p>Summary</p>\n<ul>\n <li>Rising interest rates have caused a modest dip in stocks, and a pullback in tech stocks. Some individual companies have fallen into bear markets.</li>\n <li>Alibaba represents one of the highest quality (though speculative) hyper-growth blue-chips you can buy today. It began the tech pullback highly undervalued and is now 42% undervalued.</li>\n <li>Post earnings, when management updated analysts on regulatory risks, the LT growth consensus from all 59 analysts went up from 22.3% to 26.0% CAGR. The growth outlook has improved.</li>\n <li>Yet BABA is now trading at some of the lowest valuations in its history, resulting in 27% CAGR consensus return potential through 2027, and 6X the risk-adjusted expected returns of the S&amp;P 500 for the next five years.</li>\n <li>Thanks to the potential to become one of the best dividend growth blue-chips of tomorrow, I've invested almost $50,000 into BABA, and am willing to invest up to $100K if it keeps falling in the short term. For those comfortable with the complex risk profile of this company, and who use proper diversification and prudent risk management, BABA represents a potentially life-changing and rich retirement dream-making long-term investment opportunity.</li>\n <li>This idea was discussed in more depth with members of my private investing community, The Dividend Kings.Get started today »</li>\n</ul>\n<p>It's been a volatile few weeks for stocks, but tech stocks in particular.</p>\n<p><img src=\"https://static.tigerbbs.com/54960030434467240b8c2876e6eaab19\" tg-width=\"640\" tg-height=\"389\" referrerpolicy=\"no-referrer\">While the S&amp;P 500 is just barely off its recent all-time highs, the Nasdaq has fallen 6%. And of course, it's a market of stocks, not a stock market. Individual tech stocks are in corrections or even bear markets.</p>\n<ul>\n <li>tech stocks in general, are now in a pullback</li>\n <li>induced by rising rate concerns</li>\n</ul>\n<p>Why Rising Rates Are NOT A Concern For Prudent Long-Term Investors</p>\n<p>In the modern era, primarily the last 25 years, all stocks have done well in rising long-term rate environments.</p>\n<p><img src=\"https://static.tigerbbs.com/790f8160df564e9692be64a3eb0e396f\" tg-width=\"640\" tg-height=\"484\" referrerpolicy=\"no-referrer\"><i>(Source: Ben Carlson)</i></p>\n<ul>\n <li>growth, value, small, large, didn't matter, stocks went up as rates rose</li>\n</ul>\n<ul>\n <li>A study from JPMorgan(NYSE:JPM)found that from 1963 through 2019 stocks generally went up as long as 10-year yields were under 5%.</li>\n <li>Goldman Sachs'(NYSE:GS)head of quantitative research finds that the rate of interest rate is more important than the actual rate itself</li>\n <li>37+ basis points per month is the tipping point strongly correlated with short-term corrections</li>\n <li><b>in the last month, 10-year yields are up 39 basis points</b></li>\n <li>a level that is historically correlated with mild and short market declines</li>\n <li>in other words, this stock market dip is 100% normal and expected by prudent investors who understand market history</li>\n</ul>\n<p>Even so-called \"bond alternatives,\" such as REITs, are not hurt by rising long-term rates.</p>\n<ul>\n <li>From 1972 to 2018 the % of REIT total returns explained by 10-year yields was just 2%</li>\n <li>had you been able to predict interest rates with perfect precision, you couldn't have predicted actual REIT returns</li>\n</ul>\n<p>Prudent long-term investors know that you don't actually have to predict interest rates to be successful.</p>\n<ul>\n <li>long-term interest rates are just one of many factors that determine company success over time</li>\n <li>and have a relatively small impact on fundamental growth rates</li>\n <li>bond prices are 100% a function of credit quality and LT interest rates</li>\n <li>stock prices are 91% a function (over the long-term) of fundamentals and valuations</li>\n <li>other than generating income, stocks and bonds are different asset classes that are nothing alike</li>\n <li><b>no stock is EVER a true \"Bond alternative\" because of this fundamental fact</b></li>\n</ul>\n<p><img src=\"https://static.tigerbbs.com/6deb7a5ba69273298a5256674c2dd2e8\" tg-width=\"640\" tg-height=\"526\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/74ba0ed8c210f5a079516c7da4f40e80\" tg-width=\"716\" tg-height=\"738\" referrerpolicy=\"no-referrer\"></p>\n<p>If you focus on the trinity of yield + growth + valuation you are optimizing the fundamentals that drive 91% of long-term stock returns.</p>\n<ul>\n <li>combining the 3 core fundamentals of long-term total returns with prudent risk management = practicing disciplined financial science</li>\n</ul>\n<p><b>My Personal Phoenix Retirement Portfolio Fundamentals (75% Dividend Stocks/25% Growth Stocks)</b></p>\n<ul>\n <li>average quality: 10.7/12 SWAN vs. 10.9 average aristocrat</li>\n <li>average safety score: 4.8/5 very safe vs. 4.7 average aristocrat</li>\n <li>average credit rating: A- stable vs. A- stable average aristocrat (2.5% 30-year bankruptcy risk)</li>\n <li><b>the yield on cost: 3.8%</b></li>\n <li><b>current yield: 3.3% vs. 1.6% S&amp;P, 2.1%</b>dividend aristocrats (our equity benchmark) and<b>1.8% a 60/40 stock/bond portfolio</b></li>\n <li><b>Morningstar long-term growth forecast: 16.2% CAGR</b>vs. 6.4% S&amp;P 500 &amp; 7.0% dividend aristocrats</li>\n <li><b>Dividend growth forecast: 7.0% CAGR</b>= almost 4X the rate of inflation, double every decade (every 15-years in inflation-adjusted dollars)</li>\n <li>weighted average forward PE: 16.6 vs. 18.9 historical norm vs. 21.9 S&amp;P 500</li>\n <li><b>average discount to fair value (Morningstar estimate): 12%</b>vs. -32% S&amp;P 500 and -13% aristocrats</li>\n <li><b>5-year analyst consensus total return potential</b>: 3.3% yield + 16.2% CAGR long-term growth +2.6% CAGR valuation boost =<b>22.1%CAGR</b>vs. 6.5% S&amp;P 500</li>\n <li><b>Risk-Adjusted Expected Return: 16.2% CAGR</b>vs. 4.0% CAGR S&amp;P 500 (<b>4.0X market's expected return</b>)</li>\n <li><i><b>LT Consensus Total Return Potential:</b></i><i>3.3% yield on cost + 16.2% growth =</i><i><b>19.5% CAGR</b></i><i>vs. 8.0% S&amp;P 500 and 9.1% dividend aristocrats</i></li>\n</ul>\n<p>How does a double the market's yield and LT growth consensus sound?</p>\n<p>How about the potential to quadruple the S&amp;P 500's returns over the next five years and more than double the market's long-term consensus return potential?</p>\n<p>You can't find that in any index fund, you have to build yourself. That's what DK Phoenix has been doing for almost a year, via a combination of opportunistic limit buying and dollar-cost averaging.</p>\n<ul>\n <li>I've invested about $500,000 of my life savings into the DK Phoenix strategy</li>\n <li>I'm definitely eating my own cooking</li>\n</ul>\n<p>The results so far have been spectacular. 40% gains from a portfolio that started out 100% bonds and has been buying every single day, including during record highs and overvalued markets.</p>\n<p>More importantly, this portfolio is generating an ocean of very safe, and steadily growing dividends.</p>\n<ul>\n <li>during the Great Recession S&amp;P 500 dividends down 25%</li>\n <li>this portfolio's dividends were flat</li>\n</ul>\n<p>However, I want to point out how the potential combination of strong yield + fantastic growth potential and attractive valuations means this portfolio is potentially set up for returns on par with the greatest investors in history.</p>\n<p><img src=\"https://static.tigerbbs.com/d1567a4569f51c6d5f83e6dd572db55c\" tg-width=\"640\" tg-height=\"412\" referrerpolicy=\"no-referrer\"></p>\n<p>But not from some complex or risky asset you have to manage and tie up your money in for seven to 15 years (as with hedge funds), but a 100% liquid world-class blue-chip investment.</p>\n<ul>\n <li>blue-chip dividend investing at its finest</li>\n <li>high-probability/low risk buys that are 91% likely to meet our goals over the long-term</li>\n</ul>\n<p>Note that this portfolio is 25% growth stocks, though every growth company is one I expect to eventually pay a dividend.</p>\n<p>Whether it takes 5 or 50 years doesn't matter to me, because I have 75% of my portfolio generating over $20,000 per year in very safe income that rises in any economic or market condition.</p>\n<p>Why I'm Backing Up The Truck On Alibaba In This Tech Pullback</p>\n<p>My personal Phoenix retirement portfolio is what tracks every Dividend Kings Daily Blue-Chip Deal Video Recommendation.</p>\n<p><img src=\"https://static.tigerbbs.com/ccec58a2a2e51918ad4619f5b10ae7b9\" tg-width=\"640\" tg-height=\"140\" referrerpolicy=\"no-referrer\"></p>\n<ul>\n <li>I've bought Alibaba (BABA) 87 times since April 2020</li>\n <li>investing a total of about $47,000</li>\n <li>about 6.9% of my personal Phoenix portfolio (100 companies)</li>\n <li>my personal risk cap on BABA is $100,000 for the next 20 years, 10X less than what I plan to invest in Amazon(NASDAQ:AMZN)</li>\n <li>my goal is to invest $1 million into Amazon in my lifetime, as fast as I can</li>\n <li>but still a potentially life-changing and rich retirement making investment (see reason five)</li>\n</ul>\n<p>Why am I willing to put up to $100,000 of my hard-earned savings to work in this speculative hyper-growth blue-chip?</p>\n<p>For the same 6 reasons that BABA at today's outrageously attractive valuation might be just what your diversified and prudently risk-managed portfolio needs.</p>\n<p>Reason 1: An Extremely High-Quality Company</p>\n<p>The Dividend Kings motto is \"Quality first and prudent valuation and sound risk management always.\"</p>\n<p>Alibaba Overall Quality: 80% = 10/12 Speculative SWAN</p>\n<table>\n <tbody>\n  <tr>\n   <td><b>BABA</b></td>\n   <td><b>Final Score</b></td>\n   <td><b>Rating</b></td>\n  </tr>\n  <tr>\n   <td>Balance Sheet Safety</td>\n   <td>88%</td>\n   <td>5/5 Very Safe</td>\n  </tr>\n  <tr>\n   <td>Business Model</td>\n   <td>90%</td>\n   <td>3/3 Wide and Stable Moat</td>\n  </tr>\n  <tr>\n   <td>Dependability</td>\n   <td>68%</td>\n   <td>2/4 Above-Average Dependability</td>\n  </tr>\n  <tr>\n   <td><b>Total</b></td>\n   <td><b>80%</b></td>\n   <td><b>10 (SWAN) - Speculative</b></td>\n  </tr>\n </tbody>\n</table>\n<p><i>(Source:Dividend Kings Safety &amp; Quality Tool) updated at the start and end of each day</i></p>\n<ul>\n <li>unchanged from last quarter</li>\n</ul>\n<p>DK overall quality scores factor in about 100 fundamental metrics covering</p>\n<ul>\n <li>dividend safety</li>\n <li>balance sheet strength</li>\n <li>short and long-term bankruptcy risk</li>\n <li>accounting and corporate fraud</li>\n <li>profitability and business model</li>\n <li>long-term sustainability</li>\n <li>management quality</li>\n <li>dividend friendly corporate culture/income dependability</li>\n</ul>\n<p><b>Alibaba Is the 136th Highest Quality Master List Company (Out of 490)</b></p>\n<p><img src=\"https://static.tigerbbs.com/c259ff2db589224b1c883dfd27a06abd\" tg-width=\"640\" tg-height=\"220\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: DK Safety &amp; Quality Tool) updated at the end of each day, sorted by overall quality score</i></p>\n<p>The DK Master List includes every dividend aristocrat, king, champion, and 12/12 Ultra SWAN quality company. Among the highest quality companies on earth, BABA ranks 136th.</p>\n<p>Alibaba's 80% quality score means its similar in quality to such 10/12 SWANs, 11/12 Super SWANs, and 12/12 Ultra SWANs as</p>\n<ul>\n <li>General Dynamics (GD): non-speculative dividend aristocrat</li>\n <li>salesforce.com (CRM): non - speculative hyper-growth</li>\n <li>Royal Bank of Canada (RY): non - speculative</li>\n <li>UnitedHealth Group (UNH): non - speculative</li>\n <li>Facebook (FB): non - speculative hyper-growth</li>\n <li>Cisco (CSCO): non - speculative</li>\n <li>Magellan Midstream Partners (MMP) - non-speculative</li>\n <li>Lockheed Martin (LMT) - non -speculative</li>\n <li>Texas Instruments (TXN) - non-speculative</li>\n <li>British American Tobacco (BTI) - non-speculative</li>\n</ul>\n<p>All told, our quality score includes 137 fundamental metrics pertaining to dividend safety, long-term dependability, and total returns. Every metric was selected based on</p>\n<ul>\n <li>decades of empirical data</li>\n <li>the experience of the greatest investors in history</li>\n <li>eight rating agencies</li>\n <li>and what blue-chip economists and analyst firms consider most closely correlated to a company's long-term success.</li>\n</ul>\n<p>Our goal is to ensure we see fundamental deterioration coming before dividends get cut and a company, in a worst-case scenario, goes bankrupt.</p>\n<ul>\n <li>even dividend aristocrats can fail (just ask GE or CTL investors)</li>\n <li>even dividend aristocrats can go bankrupt (just ask Kmart or Winn-Dixie investors)</li>\n</ul>\n<p>There are no sacred cows in the Dividend Kings universe. Where the fundamentals lead we always follow.</p>\n<ul>\n <li>the essence of financial science</li>\n</ul>\n<p>Reason 2: Remarkable Long-Term Growth Potential</p>\n<p><img src=\"https://static.tigerbbs.com/7c6b6a726a78d0e0d012df46602fd475\" tg-width=\"640\" tg-height=\"132\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: FactSet Research Terminal)</i></p>\n<ul>\n <li>according to FactSet the median LT growth consensus from all 59 analysts that cover BABA is 26.0% CAGR</li>\n <li>collectively these 59 experts know BABA better than anyone other than management</li>\n <li>pre-earnings growth consensus was 22.3%</li>\n</ul>\n<p><img src=\"https://static.tigerbbs.com/b39eecccd04752aa11a27f8f8c8d6587\" tg-width=\"640\" tg-height=\"390\" referrerpolicy=\"no-referrer\"></p>\n<ul>\n <li>YCharts LT growth consensus is less bullish but still showing 20% hyper-growth</li>\n</ul>\n<p><img src=\"https://static.tigerbbs.com/9090a70c545a4c112f90b02d4de12131\" tg-width=\"640\" tg-height=\"395\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: FAST Graphs, FactSet Research)</i></p>\n<ul>\n <li>5 analyst median FAST Graphs consensus is 25.3% CAGR LT growth</li>\n</ul>\n<p>Alibaba Medium-Term Growth Consensus</p>\n<table>\n <tbody>\n  <tr>\n   <td><b>Metric</b></td>\n   <td><b>Fiscal 2021 Consensus</b></td>\n   <td><b>2022 consensus growth</b></td>\n   <td><b>2023 consensus growth</b></td>\n   <td><b>2024 consensus growth</b></td>\n   <td><b>2025 consensus growth</b></td>\n   <td><p><b>2026 consensus growth</b></p></td>\n  </tr>\n  <tr>\n   <td>EPS</td>\n   <td>39%</td>\n   <td>15%</td>\n   <td>24%</td>\n   <td>23%</td>\n   <td>20%</td>\n   <td>16%</td>\n  </tr>\n  <tr>\n   <td>Owner Earnings (Buffett smoothed out FCF)</td>\n   <td>-3%</td>\n   <td>162%</td>\n   <td>NA</td>\n   <td>NA</td>\n   <td>NA</td>\n   <td>NA</td>\n  </tr>\n  <tr>\n   <td>Operating Cash Flow</td>\n   <td>45%</td>\n   <td>11%</td>\n   <td>18%</td>\n   <td>29%</td>\n   <td>NA</td>\n   <td>NA</td>\n  </tr>\n  <tr>\n   <td>Free cash flow</td>\n   <td>52%</td>\n   <td>-1%</td>\n   <td>25%</td>\n   <td>24%</td>\n   <td>NA</td>\n   <td>NA</td>\n  </tr>\n  <tr>\n   <td>EBITDA</td>\n   <td>58%</td>\n   <td>24%</td>\n   <td>23%</td>\n   <td>NA</td>\n   <td>NA</td>\n   <td>NA</td>\n  </tr>\n  <tr>\n   <td>EBIT (operating profit)</td>\n   <td>29%</td>\n   <td>40%</td>\n   <td>30%</td>\n   <td>NA</td>\n   <td>NA</td>\n   <td>NA</td>\n  </tr>\n </tbody>\n</table>\n<p><i>(Source: FAST Graphs, FactSet Research Terminal)</i></p>\n<p>20% to 26% CAGR LT growth consensus is one of the fastest of any company on earth, much less a $650 billion behemoth like BABA.</p>\n<p>Where is BABA's remarkable growth expected to come from?</p>\n<p><img src=\"https://static.tigerbbs.com/7b04a7c47511897fa2d2e3170feaf91b\" tg-width=\"640\" tg-height=\"413\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: earnings presentation)</i></p>\n<ul>\n <li>Alibaba has almost 1 billion users</li>\n <li>and is one of the fastest-growing cloud computing companies on earth</li>\n <li>#1 in cloud computing in China</li>\n</ul>\n<p><img src=\"https://static.tigerbbs.com/d8d32d464a818f669520b792adf9971a\" tg-width=\"640\" tg-height=\"484\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: earnings presentation)</i></p>\n<ul>\n <li><b>Alibaba is the Amazon/Alphabet/Facebook/PayPal/Microsoft of China</b></li>\n <li>it's basically a superior quality Chinese Nasdaq index</li>\n <li>just as Amazon is a superior quality alternative to the US Nasdaq</li>\n <li>except that BABA has even more optionality than Amazon courtesy of several<b>\"Super Apps\"</b>of which the US has no equivalent</li>\n <li>Super Apps are basically all the apps you use on a daily basis in one, and in China, they dominate the lives of almost 1.5 billion people</li>\n <li>ecosystems of steroids, and the ultimate wide-moat businesses</li>\n <li>the only effective limitation is government regulations (more on this in the risk profile)</li>\n</ul>\n<p><img src=\"https://static.tigerbbs.com/9f0062920c271ce804438eca217557aa\" tg-width=\"640\" tg-height=\"338\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: FactSet Research Terminal)</i></p>\n<ul>\n <li>27% annualized revenue growth through 2026</li>\n <li>vs. 19% for Amazon</li>\n <li>34% CAGR cloud computing revenue growth</li>\n <li>core Chinese commerce sales growth 28% CAGR</li>\n</ul>\n<p>With almost 1.5 billion Chinese consumers to tap into, Alibaba's growth runway is very long.</p>\n<ul>\n <li>its optionality is among the best of any company on earth</li>\n <li>potentially superior to even Amazon's</li>\n</ul>\n<p>Alibaba Consensus Profitability Forecast</p>\n<table>\n <tbody>\n  <tr>\n   <td><b>Year</b></td>\n   <td><b>Sales</b></td>\n   <td><b>FCF</b></td>\n   <td><b>EBITDA</b></td>\n   <td><b>EBIT</b></td>\n   <td><b>Net Income</b></td>\n  </tr>\n  <tr>\n   <td>2020</td>\n   <td>$71,376</td>\n   <td>$18,634.0</td>\n   <td>$22,077.0</td>\n   <td>$12,803.0</td>\n   <td>$20,902.0</td>\n  </tr>\n  <tr>\n   <td>2021</td>\n   <td>$109,049.0</td>\n   <td>$30,666.0</td>\n   <td>$32,294.0</td>\n   <td>$18,332.0</td>\n   <td>$26,210.0</td>\n  </tr>\n  <tr>\n   <td>2022</td>\n   <td>$142,453.0</td>\n   <td>$33,923.0</td>\n   <td>$40,043.0</td>\n   <td>$24,985.0</td>\n   <td>$27,169.0</td>\n  </tr>\n  <tr>\n   <td>2023</td>\n   <td>$172,942.0</td>\n   <td>$39,671.0</td>\n   <td>$49,694.0</td>\n   <td>$33,156.0</td>\n   <td>$34,068.0</td>\n  </tr>\n  <tr>\n   <td>2024</td>\n   <td>$215,267.0</td>\n   <td>$45,789.0</td>\n   <td>$59,475.0</td>\n   <td>$43,961.0</td>\n   <td>$43,031.0</td>\n  </tr>\n  <tr>\n   <td>2025</td>\n   <td>$264,808.0</td>\n   <td>NA</td>\n   <td>$72,896.0</td>\n   <td>$57,133.0</td>\n   <td>$54,736.0</td>\n  </tr>\n  <tr>\n   <td>2026</td>\n   <td>$296,476.0</td>\n   <td>NA</td>\n   <td>$95,192.0</td>\n   <td>$70,453.0</td>\n   <td>$63,654.0</td>\n  </tr>\n </tbody>\n</table>\n<table>\n <tbody>\n  <tr>\n   <td><b>Year</b></td>\n   <td><b>FCF Margin</b></td>\n   <td><b>EBITDA Margin</b></td>\n   <td><b>EBIT Margin</b></td>\n   <td><b>Net Margin</b></td>\n  </tr>\n  <tr>\n   <td>2020</td>\n   <td>26.1%</td>\n   <td>30.9%</td>\n   <td>17.9%</td>\n   <td>29.3%</td>\n  </tr>\n  <tr>\n   <td>2021</td>\n   <td>28.1%</td>\n   <td>29.6%</td>\n   <td>16.8%</td>\n   <td>24.0%</td>\n  </tr>\n  <tr>\n   <td>2022</td>\n   <td>23.8%</td>\n   <td>28.1%</td>\n   <td>17.5%</td>\n   <td>19.1%</td>\n  </tr>\n  <tr>\n   <td>2023</td>\n   <td>22.9%</td>\n   <td>28.7%</td>\n   <td>19.2%</td>\n   <td>19.7%</td>\n  </tr>\n  <tr>\n   <td>2024</td>\n   <td>21.3%</td>\n   <td>27.6%</td>\n   <td>20.4%</td>\n   <td>20.0%</td>\n  </tr>\n  <tr>\n   <td>2025</td>\n   <td>NA</td>\n   <td>27.5%</td>\n   <td>21.6%</td>\n   <td>20.7%</td>\n  </tr>\n  <tr>\n   <td>2026</td>\n   <td>NA</td>\n   <td>32.1%</td>\n   <td>23.8%</td>\n   <td>21.5%</td>\n  </tr>\n </tbody>\n</table>\n<p><i>(Source: FactSet Research Terminal)</i></p>\n<ul>\n <li>Alibaba is still relatively early in its growth cycle</li>\n <li>investing very heavily into R&amp;D and growth capex: $12.6 billion in 2020</li>\n <li>$37.2 billion growth spending consensus in 2026</li>\n <li>yet analysts expect already impressive profitability to remain relatively stable during the next five years</li>\n</ul>\n<p><b>Alibaba Consensus Potential Future Dividend Forecast</b></p>\n<table>\n <tbody>\n  <tr>\n   <td><b>Year</b></td>\n   <td><b>FCF/Share Consensus</b></td>\n   <td><b>Dividend Per Share (50% Payout Ratio)</b></td>\n   <td><b>Yield On Today's Cost</b></td>\n   <td><b>Consensus Yield Potential</b></td>\n   <td><b>2026 Consensus Price</b></td>\n  </tr>\n  <tr>\n   <td>2020</td>\n   <td>$6.98</td>\n   <td>$3.49</td>\n   <td>1.47%</td>\n   <td>NA</td>\n   <td>NA</td>\n  </tr>\n  <tr>\n   <td>2021</td>\n   <td>$8.95</td>\n   <td>$4.48</td>\n   <td>1.88%</td>\n   <td>1.39%</td>\n   <td>$323.00</td>\n  </tr>\n  <tr>\n   <td>2022</td>\n   <td>$10.70</td>\n   <td>$5.35</td>\n   <td>2.25%</td>\n   <td>1.41%</td>\n   <td>$379.00</td>\n  </tr>\n  <tr>\n   <td><i><b>2023</b></i></td>\n   <td><i><b>$13.84</b></i></td>\n   <td><i><b>$6.92</b></i></td>\n   <td><i><b>2.91%</b></i></td>\n   <td><i><b>1.48%</b></i></td>\n   <td><i><b>$466.00</b></i></td>\n  </tr>\n </tbody>\n</table>\n<p><i>(Source: FactSet Research Terminal)</i></p>\n<ul>\n <li>if Alibaba were to start paying 50% of its FCF as dividends then by 2023 that would equal a yield on cost of almost 3% and 1.5% consensus yield</li>\n</ul>\n<p>Why do I expect BABA to eventually start paying dividends?</p>\n<p><b>Alibaba Consensus Balance Sheet Forecast</b></p>\n<p><img src=\"https://static.tigerbbs.com/61c78f5b92f0f7db55569cdd0cd8cd2f\" tg-width=\"640\" tg-height=\"258\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: FactSet Research Terminal)</i></p>\n<ul>\n <li>despite spending $37 billion to fund growth in 2026, analysts expect BABA to end fiscal 2026 with $275 billion in cash and $260 billion in net cash</li>\n <li>more than Apple(NASDAQ:AAPL)had when it started buying back stock and paying dividends</li>\n</ul>\n<p>What's more, by 2024 alone analysts expect BABA's annual free cash flow to reach $46 billion.</p>\n<p><img src=\"https://static.tigerbbs.com/a072c7a0e2793b347b635e08315d24bc\" tg-width=\"640\" tg-height=\"148\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: FactSet Research Terminal)</i></p>\n<ul>\n <li>if FCF grows at the 26% LT EPS growth consensus rate then by 2026 $73 billion in annual free cash flow</li>\n</ul>\n<p>The bottom line on BABA is that it's the #1 global digital retailer but so much more. And it has the potential to make patient long-term investors extremely wealthy and eventually fund comfortable retirements from future dividends alone.</p>\n<ul>\n <li>what I call my \"Jack Ma retirement plan\"</li>\n</ul>\n<p>Yet despite this incredible quality and growth potential, the market is mispricing BABA to a remarkable degree right now.</p>\n<p>Reason 3: One Of Most Undervalued Tech Stocks In The World</p>\n<table>\n <tbody>\n  <tr>\n   <td><b>Metric</b></td>\n   <td><b>Historical Fair Value Multiples (all-years)</b></td>\n   <td><b>Fiscal 2021</b></td>\n   <td><b>Fiscal 2022</b></td>\n   <td><b>Fiscal 2023</b></td>\n  </tr>\n  <tr>\n   <td>Earnings</td>\n   <td>32.2</td>\n   <td>$334</td>\n   <td>$386</td>\n   <td>$480</td>\n  </tr>\n  <tr>\n   <td>Owner Earnings (Buffett smoothed out FCF)</td>\n   <td>24.6</td>\n   <td>$218</td>\n   <td>$572</td>\n   <td>NA</td>\n  </tr>\n  <tr>\n   <td>Operating Cash Flow</td>\n   <td>23.1</td>\n   <td>$325</td>\n   <td>$362</td>\n   <td>$428</td>\n  </tr>\n  <tr>\n   <td>Free Cash Flow</td>\n   <td>30.7</td>\n   <td>$338</td>\n   <td>$336</td>\n   <td>$421</td>\n  </tr>\n  <tr>\n   <td>EBITDA</td>\n   <td>33.2</td>\n   <td>$389</td>\n   <td>$485</td>\n   <td>$597</td>\n  </tr>\n  <tr>\n   <td>EBIT (operating income)</td>\n   <td>45.1</td>\n   <td>$298</td>\n   <td>$416</td>\n   <td>$541</td>\n  </tr>\n  <tr>\n   <td><b>Average</b></td>\n   <td><b>$307</b></td>\n   <td><b>$413</b></td>\n   <td><b>$485</b></td>\n  </tr>\n  <tr>\n   <td>Current Price</td>\n   <td>$237.76</td>\n  </tr>\n  <tr>\n   <td><p><i><b>Discount To Fair Value</b></i></p></td>\n   <td><i><b>23%</b></i></td>\n   <td><i><b>42%</b></i></td>\n   <td><i><b>51%</b></i></td>\n  </tr>\n  <tr>\n   <td><i>Upside To Fair Value</i></td>\n   <td><i>29%</i></td>\n   <td><i>74%</i></td>\n   <td><i>104%</i></td>\n  </tr>\n  <tr>\n   <td><p><i><b>Annualized Total Return Potential</b></i></p></td>\n   <td><i><b>NA</b></i></td>\n   <td><i><b>74%</b></i></td>\n   <td><i><b>46%</b></i></td>\n  </tr>\n </tbody>\n</table>\n<p><i>(Source: F.A.S.T. Graphs, FactSet Research)</i></p>\n<p>BABA is trading at a 42% discount to fiscal 2022 consensus fundamentals (which ends March 2022)</p>\n<ul>\n <li>A return to average historical fair value by the end of March 2023 would result in a 46% CAGR total return</li>\n <li>2021 fair value range: $336 to $572</li>\n <li>2021 Harmonic Average Fair Value (smooths out outliers): $413</li>\n</ul>\n<p>Even using the most conservative fair value of $336, BABA is still 29% undervalued and a potentially good speculative buy.</p>\n<p><img src=\"https://static.tigerbbs.com/6c6cd6870a518767764bd87d37ec06d4\" tg-width=\"640\" tg-height=\"376\" referrerpolicy=\"no-referrer\"><i>(Source: FAST Graphs, FactSet Research)</i></p>\n<ul>\n <li>on a blended PE basis, BABA is now tied for the lowest valuation in its history on the NYSE</li>\n <li>in other words, if you've ever wanted to buy BABA, now is the time</li>\n <li>very likely to be near its eventual bottom</li>\n</ul>\n<p>I know that a lot of readers are now thinking \"sure, consensus estimates say BABA is a growth powerhouse, BUT what if analysts are wrong.\"</p>\n<p>There is one thing we know for certain about all growth consensus estimates.</p>\n<ul>\n <li>they are wrong</li>\n <li>the question is how much</li>\n</ul>\n<p><b>Alibaba Analyst Scorecard</b></p>\n<p><img src=\"https://static.tigerbbs.com/bd5201fe390f06c8cd94462a06114fdd\" tg-width=\"640\" tg-height=\"376\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/6b1da8d579e9049d31188aafb07d3c47\" tg-width=\"640\" tg-height=\"346\" referrerpolicy=\"no-referrer\"></p>\n<p>Despite a highly complex business model analysts are relatively good at forecasting BABA's growth. Specifically, the company has only missed two-year earnings growth forecasts twice out of the six years that analysts have offered them.</p>\n<ul>\n <li>the margin of error 20% to the upside and downside (modern era with lots of analyst coverage)</li>\n <li>long-term growth consensus range: 20.0% to 26% CAGR</li>\n <li>long-term growth consensus (from all 60 analysts ): 25.3% CAGR</li>\n <li>the margin of error adjusted long-term growth consensus range: 16% to 32% CAGR</li>\n</ul>\n<p><img src=\"https://static.tigerbbs.com/10e55ff4c0570b0156c5fc04134c6c90\" tg-width=\"640\" tg-height=\"456\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: F.A.S.T. Graphs, FactSet Research)</i></p>\n<p>The current analyst consensus of 26.0% CAGR is similar to the growth rate of the last five years. The historical growth range since BABA came to the NYSE is 20% to 44% CAGR.</p>\n<p>The secular growth catalysts represented by BABA's dominance in Chinese digital payments, banking, cloud computing, online retail, digital marketing, etc., means that I consider the analyst growth consensus range reasonable and achievable.</p>\n<p>Stricter regulations are not expected to hamper BABA's growth significantly, according to the 60 analyst median consensus.</p>\n<p>Reason 4: Total Return Potential That Could Make You Rich</p>\n<ul>\n <li>for non-dividend stocks, total returns generated from growth and valuation mean reversion is the entire point for most investors</li>\n <li>BABA's consensus return potential is outstanding</li>\n</ul>\n<p><b>BABA 2023 Consensus Return Potential</b></p>\n<p><img src=\"https://static.tigerbbs.com/ba5fce782ee2484df31380823cbd08d1\" tg-width=\"640\" tg-height=\"383\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: F.A.S.T. Graphs, FactSet Research)</i></p>\n<p>If BABA grows as analysts expect through March 2023, and returns to historical fair value, then investors could expect</p>\n<ul>\n <li>102% total returns</li>\n <li>39.9% CAGR returns</li>\n <li>vs. 2.9% CAGR S&amp;P 500</li>\n <li><i><b>14X better than the S&amp;P 500</b></i></li>\n</ul>\n<p>Alibaba March 2027 Consensus Return Potential</p>\n<p><img src=\"https://static.tigerbbs.com/ad665b05d566bc36268bf51f43f642a8\" tg-width=\"640\" tg-height=\"395\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: F.A.S.T. Graphs, FactSet Research) - actual consensus EPS estimates through 2026</i></p>\n<p>If BABA grows as analysts expect through March 2027, and returns to historical fair value, then you could expect</p>\n<ul>\n <li>324% total returns, more than quadrupling your investment</li>\n <li>26.8% CAGR returns</li>\n <li>vs. 6.5% CAGR S&amp;P 500</li>\n</ul>\n<p>Over the very long term, here's what analysts expect.</p>\n<ul>\n <li>0% yield + 26.0% CAGR growth = 26.0% CAGR total returns (16% to 32% CAGR range)</li>\n <li>vs. 8.0% CAGR S&amp;P 500 and 9.1% CAGR dividend aristocrats</li>\n</ul>\n<p>Reason 5: Total Return Potential That Could Turn Thousands Into Tens Of Millions Over Decades</p>\n<p>What does potential hyper-growth sustained over many years and decades look like? Generation wealth, that can not just fund your rich retirement, but that of your children and grandchildren as well.</p>\n<p>Alibaba 30-Year Monte Carlo Simulation, Statistical Inflation+ Tax Adjusted Total Return Forecast</p>\n<p><img src=\"https://static.tigerbbs.com/fdf77d6747dcbef9c96c2442919fb370\" tg-width=\"640\" tg-height=\"201\" referrerpolicy=\"no-referrer\"><img src=\"https://static.tigerbbs.com/4e592eb0d96f33779a576b8fee99193a\" tg-width=\"640\" tg-height=\"294\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/d7a3bf90aac22084eea55216a46577c1\" tg-width=\"640\" tg-height=\"282\" referrerpolicy=\"no-referrer\"></p>\n<blockquote>\n <i>Monte Carlo simulation results for 5000 portfolios with $1,000 initial portfolio balance using available statistical model data from Jan 2015 to Dec 2020.Returns were modeled as correlated random samples from a multivariate normal distribution.The historical pre-tax return for the selected portfolio for this period was 21.09% mean return (14.38% CAGR) with a 36.62% standard deviation of annual returns.The simulated asset returns were adjusted based on provided tax assumptions.The simulated inflation model used historical inflation with a 1.75% mean and 0.94% standard deviation based on the Consumer Price Index (CPI-U) data from Jan 2015 to Dec 2020.The generated inflation samples were correlated with simulated asset returns based on historical correlations.The available historical data for the simulation inputs was constrained by Alibaba Group Holding Limited (BABA) [Oct 2014 - Feb 2021]. (Source: Portfolio Visualizer)</i>\n</blockquote>\n<p>BABA's historical returns are depressed because it's currently in a bear market. Yet even if it delivers historical returns over the next 30 years, the standard retirement time frame there is an 80% statistical probability that</p>\n<ul>\n <li>$1,000 invested today becomes $6,500 to $324,000</li>\n <li>adjusted-for inflation and taxes</li>\n <li>assuming top tax bracket, including for my home state of MN</li>\n</ul>\n<p>What if BABA is able to sustain approximately 15% CAGR growth for longer than 30 years? Then a modest investment today could transform into generation wealth.</p>\n<p>Alibaba 75-Year Monte Carlo Simulation, Statistical Inflation+ Tax Adjusted Total Return Forecast</p>\n<p><img src=\"https://static.tigerbbs.com/130bb2a9ff8bb6a1de235ce4fda182f6\" tg-width=\"640\" tg-height=\"203\" referrerpolicy=\"no-referrer\"><img src=\"https://static.tigerbbs.com/7a1be76959eaedd5e25ed17b15702546\" tg-width=\"640\" tg-height=\"291\" referrerpolicy=\"no-referrer\"><i>(Source: Portfolio Visualizer)</i></p>\n<ul>\n <li>with a $75,000 total investment, made at the best valuations in five years, there is a very good statistical chance that I will eventually become an Alibaba millionaire</li>\n <li>there is a decent chance that my children and grandchildren will be Alibaba billionaires</li>\n</ul>\n<p>Reason 6: One Of The Most Reasonable And Prudent Growth Stocks You Can Buy Today</p>\n<p>I never recommend a company, much less put my own money at risk, without first knowing exactly how prudent a potential investment it is relative to the S&amp;P 500, most people's default alternative.</p>\n<p><img src=\"https://static.tigerbbs.com/28d872260c41f72ddc16460a3024e8bf\" tg-width=\"640\" tg-height=\"197\" referrerpolicy=\"no-referrer\"></p>\n<p>The investment decision score is based on valuation and the three core principles of all successful long-term investors.</p>\n<img src=\"https://static.tigerbbs.com/25b7070d1af7586faee7c2814d82bb5c\" tg-width=\"552\" tg-height=\"774\">\n<table>\n <tbody>\n  <tr></tr>\n  <tr></tr>\n </tbody>\n</table>\n<p><i>(Source:Dividend Kings Automated Investment Decision Tool)</i></p>\n<p>BABA is one of the most reasonable and prudent hyper-growth stocks you can buy today. It offers</p>\n<ul>\n <li>objectively superior quality to the average S&amp;P 500 company (credit ratings and ROC)</li>\n <li>much faster growth (3 to 4X faster)</li>\n <li>much superior valuation (mirror image of the S&amp;P 500)</li>\n <li><b>6X the 5-year risk-adjusted expected returns</b></li>\n</ul>\n<p>That's assuming you're</p>\n<ul>\n <li>comfortable with the risk profile (see dive section)</li>\n <li>own it within a diversified and prudently risk-managed portfolio</li>\n</ul>\n<p>Alibaba Risk Profile: Why BABA Isn't Right For Everyone<img src=\"https://static.tigerbbs.com/e3b51aa88280a43b2551902a5ae635ef\" tg-width=\"640\" tg-height=\"223\" referrerpolicy=\"no-referrer\">Fundamental Risk Summary</p>\n<blockquote>\n In our view, the most pressing risks to the Alibaba investment thesis are a sustained slowdown in Chinese consumption patterns, e-commerce competition, increased regulatory scrutiny, and the possibility that ancillary businesses divert management's attention and reduce profitability.China's e-commerce landscape has become increasingly competitive, with Pinduoduo registering faster GMV and user growth than Alibaba with the support of Tencent's traffic and its group-buying traffic generation method, and JD.com positioning itself as a credible rival through its fulfillment capability, quality assurance, and its partnerships with Tencent. These platforms do not yet have Alibaba's scale in China, but they specialize in specific products or services, or markets, which might impede Alibaba's growth.Alibaba is also subject to increased online and mobile payment regulation. Financial regulators in China have continuously scrutinized online and mobile payment services. Alibaba has persistently faced the issue of counterfeit and infringing goods on its marketplaces. Hangzhou government's assigning of representatives to work inside Alibaba also raise concerns of some investors, although there is no evidence of consequence of value destruction for Alibaba.Expansion into peripheral businesses might distract management, reduce profitability without materially improve Alibaba's ecosystem. While we're optimistic about Alibaba's ability to become a preferred partner for international retailers and consumer brands looking to sell in China, the firm does not enjoy the same network effect and brand recognition in other countries, and it may face challenges directly expanding in these markets...Like many other Chinese Internet companies listed in overseas markets, Alibaba operates under a\n <b>variable interest entity, or VIE, structure</b>designed to let companies bypass Chinese legal restrictions on foreign ownership in certain sectors.Alibaba's foreign investors will essentially hold shares of Alibaba's VIE domiciled in the Cayman Islands. We don't expect any legal challenges to VIE structures by the Chinese government in the future. However, if the legitimacy of Alibaba's related VIE is found to violate applicable law or regulation, Chinese regulatory authorities might take action against the VIE, including revoking the business and operating licenses of Alibaba's subsidiaries or the VIE, or discontinuing, restricting, or restructuring Alibaba's operations. Since the Chinese Ministry of Commerce has the jurisdiction to regulate VIEs, we believe overseas investors would have limited legal rights...Despite\n <b>management's proven execution capabilities</b>,\n <b>we have concerns regarding Alibaba's corporate governance</b>, which is reflected in our Poor equity stewardship rating.In our view,\n <b>Alibaba is led by a capable and ambitious management team</b>. Founder and former executive chairman Jack Ma has been the keeper of the flame since the company's founding in 1999. Under his leadership, Alibaba has become China's leading e-commerce player, accounting for the majority of transaction volume for China's online shopping industry.Over the past decade, Taobao has transformed the shopping behaviors of millions of Chinese consumers. We believe management has also done a commendable job developing and preserving Alibaba's wide economic moat by building several other leading online marketplaces and platforms such a Tmall, Juhuasuan, Alibaba.com, AliExpress, Alipay, AliCloud, and Ele.me. Although the company faces a potentially uneven long-term economic backdrop and new sources of competition in China,\n <b>we remain confident that Alibaba can sustain its wide economic moat over the long term under its existing leadership.</b>Ma's decision to step away from Alibaba's executive chairman role in 2019 and the company's board of directors will not affect our positive long-term bias for two reasons. First,\n <b>we believe recent results demonstrate that Alibaba has a deep management bench</b>,\n <b>including current CEO Daniel Zhang</b>(who was appointed CEO of Alibaba Group in May 2015, will assume the chairman role in 2019, and played a central role in the development of the Singles Day shopping event, building the Tmall platform from a regional to global business-to-consumer platform, and deploying several of Alibaba's \"New Retail\" strategies) and executive vice chairman Joe Tsai. Second, we believe Ma's involvement with the Alibaba Partnership--a group of core company managers--will allow him to stay involved with key strategic decisions...We harbor concerns about Alibaba's partnership structure, which might jeopardize the board's independence.The partnership is led by a committee of five, including Ma, executive vice chairman Joe Tsai, and CEO Daniel Zhang. The Alibaba Partnership has the exclusive right to nominate or appoint up to a simple majority of the members of its board of directors.Any board candidate it nominates is presented to shareholders for voting. If the candidate is not elected by shareholders, the partnership can appoint another candidate without a vote. That candidate will serve as an interim director until the next annual general meeting, where either the same candidate or yet another nominee proposed by Alibaba partners will stand for election.The current board of directors is composed of 11 directors, five of which are Alibaba Partnership nominees. Alibaba Partnership can also nominate or appoint two additional directors to the board, which would increase the number of directors to 13, and the Partnership will get majority control of the board.\n <b>The Partnership essentially controls the board and limits the influence of outside shareholders</b>.\" - Morningstar (emphasis added)\n</blockquote>\n<p>MSCI, Reuters and Morningstar, as well as S&amp;P, Fitch, and Moody's have concerns about BABA's corporate governance, which is factored into each company's respective rating on BABA's credit and material ESG risk (more on that later).</p>\n<ul>\n <li>all Chinese companies are speculative</li>\n <li>thus requiring a 5% higher margin of safety to be a potentially good buy (20% in the case of BABA)</li>\n <li>investors not comfortable with BABA's complex risk profile should not own it</li>\n <li>no company is right for everyone</li>\n</ul>\n<p>Alibaba ESG Risk Analysis: An Important Component Of A Company's Overall Financial Risk Profile (But Especially For Chinese Tech Companies)</p>\n<ul>\n <li>critically important to anyone concerned about corporate governance and potential accounting fraud</li>\n</ul>\n<p>In today's hyperpolarized political climate, some investors consider ESG to be political/personal ethics/opinion-driven nonsense.</p>\n<p>ESG as measured by institutions is NOT simply the concern of \"woke\" and \"on-trend\" hippy millennials trying to virtue signal to impress Silicon Valley venture capitalists or social media followers.</p>\n<blockquote>\n Companies with strong ESG profiles may be better positioned for future challenges and experience fewer instances of bribery, corruption, and fraud.\" - MSCI\n</blockquote>\n<p>According to the world's best risk-assessors, ESG metrics are a critical component of a company's overall risk profile. Here's who considers ESG important and builds it into their safety models and ratings.</p>\n<ul>\n <li>BlackRock - #1 asset manager in the world</li>\n <li>MSCI - #1 indexing giant</li>\n <li>Morningstar</li>\n <li>Reuters/Refinitiv</li>\n <li>ISS (Institutional Shareholder Services) - #1 corporate proxy firm on earth</li>\n <li>S&amp;P</li>\n <li>Fitch</li>\n <li>Moody's</li>\n <li>DBRS (Canadian credit rating agency)</li>\n <li>AMBest (insurance industry rating agency)</li>\n</ul>\n<p>The reason some investors consider ESG to be political is that some investors consider some industries to be inherently \"evil\" such as tobacco, energy, big tech, pharma, health insurers, fast-food, snack foods, and defense contractors.</p>\n<ul>\n <li>such opinions are personal and based on individual ethics</li>\n <li><b>ESG scores as calculated by institutions are quantitatively based and focused on only fundamental financial risks to the underlying business</b></li>\n <li>they are compared against industry peers and as objective as can be realistically expected</li>\n</ul>\n<p>Personal ethical or political opinions are not what rating agencies or asset managers care about.</p>\n<p>MSCI rates over 2,800 global companies on 37 ESG metrics, using a quantitative and qualitative approach, just as all the rating agencies do, and Ben Graham recommended.</p>\n<blockquote>\n Our global team of 185 experienced research analysts assesses thousands of data points across 37 ESG Key Issues, focusing on the intersection between a company's core business and the industry issues that can create significant risks and opportunities for the company. Companies are rated on an AAA-CCC scale\n <b>relative to the standards and performance of their industry peers</b>...\n</blockquote>\n<p><img src=\"https://static.tigerbbs.com/298cf61010c39363fd5dc1b3438f0774\" tg-width=\"640\" tg-height=\"570\" referrerpolicy=\"no-referrer\"></p>\n<blockquote>\n The MSCI ESG rating model seeks to answer four key questions about companies:• What are the most significant ESG risks and opportunities facing a company and its industry?• How exposed is the company to those key risks and/or opportunities?• How well is the company managing key risks and opportunities?• What is the overall picture for the company and how does it compare to its global industry peers?\" - MSCI\n</blockquote>\n<p><img src=\"https://static.tigerbbs.com/af3bf10cdfd7ab0fe07e7c636b3eded9\" tg-width=\"640\" tg-height=\"551\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: MSCI)</i></p>\n<p><b>The ESG scores you find from the best risk-assessors in the world are not opinions based on political correctness.They use a quantitative approach to fundamental company risk analysis.</b>One based on decades of historical data pertaining to minimizing the risk of fundamental deterioration, bankruptcy, and stock/bond investors getting wiped out.</p>\n<ul>\n <li>ESG risk ratings + trends make up about 20% of the overall DK quality score for most companies that have an ESG rating from MSCI, Morningstar/Sustainalytics, and Reuters/Refinitiv</li>\n</ul>\n<p><img src=\"https://static.tigerbbs.com/918fd6ab7c2e2163bd8d547d050d75d6\" tg-width=\"640\" tg-height=\"512\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/8a8bd15a9cc3aea38257b3c9645d424f\" tg-width=\"640\" tg-height=\"220\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: MSCI)</i></p>\n<ul>\n <li>based on the 12 material sustainability factors MSCI's 185 industry experts believe is important to financial risk for midstream companies, BABA scores are in the bottom 37% of its peers (below average)</li>\n <li>that score is has been improving over the last four years</li>\n <li>though it dipped one level in the 2020 annual update</li>\n</ul>\n<p>How Morningstar/Sustainalytics Assesses Long-Term ESG Financial Risk</p>\n<ul>\n <li>Morningstar/Sustainalytics cares about material ESG variables that are historically correlated to a company's enterprise value (market cap + net debt)</li>\n <li>Financial risk NOT political/personal ethical opinions are what Morningstar assesses</li>\n <li>20 fundamental metrics analyzed, compared to industry peers</li>\n <li>100 point risk scale</li>\n <li>lower is better</li>\n</ul>\n<p><img src=\"https://static.tigerbbs.com/6235ae87804a6aa4155b7553cf0470ef\" tg-width=\"640\" tg-height=\"406\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/22bc0cb2ca3614062e1aaabda81de4f0\" tg-width=\"640\" tg-height=\"370\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/2b225070612fbf42d76647657fd9c799\" tg-width=\"640\" tg-height=\"420\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/a2d7fbe67e46b7732bad777d103ec779\" tg-width=\"640\" tg-height=\"286\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/4e030c1a04fb5a8ba813bcf1831db84b\" tg-width=\"640\" tg-height=\"471\" referrerpolicy=\"no-referrer\"></p>\n<p>Every controversy surrounding BABA is factored into Morningstar ESG risk rating. That includes the controversies around anti-trust practices for which it's now under investigation by Chinese regulators.</p>\n<ul>\n <li>Morningstar considers this to be a medium ESG risk industry</li>\n <li>and management is doing an average job of managing that risk</li>\n <li>Morningstar scores BABA 26.2 \"medium risk\" in the bottom 25% of tech companies and in the top 43% of all 13,645 companies Morningstar rates</li>\n <li>risk rating increased from 24.6 to 26.2 in the past year due to increasing regulatory concerns</li>\n</ul>\n<p>Reuters/Refinitiv also provides ESG financial risk ratings.</p>\n<ul>\n <li>over 150 industry experts covering over 7,000 global companies</li>\n <li>based on 400+ fundamental metrics</li>\n <li>and 178 materially important financial ESG risk factors</li>\n</ul>\n<p><img src=\"https://static.tigerbbs.com/7da4560ef863e32a307af7f3a93b28d1\" tg-width=\"640\" tg-height=\"426\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/078e47b8a22efff637d578f67d1bdbbf\" tg-width=\"640\" tg-height=\"308\" referrerpolicy=\"no-referrer\"></p>\n<p><img src=\"https://static.tigerbbs.com/26ac2395f9786b77c8f795cd0c659d9a\" tg-width=\"640\" tg-height=\"847\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: Refinitiv)</i></p>\n<p><img src=\"https://static.tigerbbs.com/2c212bc0cfadad173dc51c91fbee9438\" tg-width=\"640\" tg-height=\"435\" referrerpolicy=\"no-referrer\"></p>\n<p><i>(Source: Interactive Brokers)</i></p>\n<ul>\n <li>Reuters ranks BABA as in the bottom 30% of its peers on actual financial ESG risk</li>\n <li>in the top 40% in terms of environmental issues</li>\n <li>bottom 30% for social</li>\n <li>bottom 20% for corporate governance</li>\n <li>and near the very bottom of its industry on controversies</li>\n <li>for a combined score that's in the bottom 10% of its peers</li>\n <li>which is why BABA's dependability score fell from 75% to 68% and resulted in a downgrade from 11/12 to 10/12 speculative quality (about two months ago)</li>\n <li>and why I'm looking to invest a maximum of $100K into BABA vs. $1 million into far lower risk Amazon</li>\n <li>risks with BABA are far higher than with AMZN</li>\n</ul>\n<p>When no less than 10 of the world's most reputable risk assessors say something is important to long-term financial risk for a company you can be sure that Dividend Kings will include it in our 61 metric safety model and 126 point quality score (converted to a 100% scale).</p>\n<ul>\n <li>there is no such thing as a \"risk-free\" company</li>\n <li>factoring in all material financial risks is how you determine whether a company is appropriate for your needs</li>\n <li>and how we determine the margin of safety required to compensate us for that risk and thus determine potentially good buy prices or better</li>\n <li>no average investor can ever be a true expert on a company</li>\n <li>but DK knows where to find the most reliable expert data to create a comprehensive safety, dependability, and quality score that includes every major risk factor a company has</li>\n</ul>\n<p>No less than Ben Graham, the father of securities analysis considered qualitative factors critical to making prudent long-term investing decisions.</p>\n<blockquote>\n <i>... a satisfactory statistical exhibition is a necessary though by no means a sufficient condition for a favorable decision by the analyst.\"</i>-Benjamin Graham, Security Analysis (1951 ed.), Page 76\n</blockquote>\n<p>In other words, Graham considered a combination of quantitative and qualitative analysis, looking at the past, present, and likely future, to be the optimal strategy for making sound long-term investments.</p>\n<ul>\n <li>Dividend Kings uses risk ratings from eight of the world's most reputable agencies</li>\n <li>if fundamentals weaken our model will know it and our scores, ratings, and recommendations will change accordingly</li>\n</ul>\n<p>Bottom Line: Alibaba Is Set To Soar And Too Cheap To Ignore</p>\n<p>I can't tell you what any stock will do over the next few weeks, months or even a year or two.</p>\n<ul>\n <li>according to JPMorgan Asset Management, 92% of 12-month returns are a function of luck</li>\n <li>over 10+ years 90% to 91% of returns are a function of fundamentals</li>\n <li>over the long-term fundamentals are 11X as powerful as luck</li>\n</ul>\n<p>Alibaba represented one of the most undervalued hyper-growth tech blue-chips before this interest rate pullback in tech began.</p>\n<p>Alibaba's recent decline has been sharper than many peers, which isn't justified by its recent earnings results, or overall fundamentals.</p>\n<p>The long-term growth outlook has gotten better, not worse.</p>\n<p>While BABA will always be an inherently speculative company, for those comfortable with the risk profile, a 42% margin of safety more than compensate for the risks you're facing.</p>\n<p>In the coming years, BABA has the potential to deliver Buffett-like returns that are almost 6X the risk-adjusted returns of the S&amp;P 500.</p>\n<p>Eventually, the cash pile will grow so large, the company will be forced to start buying back stocks and paying dividends.</p>\n<p>A modest investment in BABA today could fund a comfortable or even lavish retirement purely from future dividends in a few decades.</p>\n<p>Prudent long-term investors know that through a disciplined application of financial science we never have to pray for luck. We make our own luck over time.</p>\n<p>When it comes to Alibaba, as close to a perfect hyper-growth blue-chip investment as exists on Wall Street today, the time to make our own luck is now.</p>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>6 Reasons Alibaba Is Set To Soar And Too Cheap To Ignore</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\n6 Reasons Alibaba Is Set To Soar And Too Cheap To Ignore\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-03-02 20:17 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4410621-six-reasons-alibaba-is-too-cheap-to-ignore><strong>Seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nRising interest rates have caused a modest dip in stocks, and a pullback in tech stocks. Some individual companies have fallen into bear markets.\nAlibaba represents one of the highest quality...</p>\n\n<a href=\"https://seekingalpha.com/article/4410621-six-reasons-alibaba-is-too-cheap-to-ignore\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"BABA":"阿里巴巴","09988":"阿里巴巴-W"},"source_url":"https://seekingalpha.com/article/4410621-six-reasons-alibaba-is-too-cheap-to-ignore","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1169004570","content_text":"Summary\n\nRising interest rates have caused a modest dip in stocks, and a pullback in tech stocks. Some individual companies have fallen into bear markets.\nAlibaba represents one of the highest quality (though speculative) hyper-growth blue-chips you can buy today. It began the tech pullback highly undervalued and is now 42% undervalued.\nPost earnings, when management updated analysts on regulatory risks, the LT growth consensus from all 59 analysts went up from 22.3% to 26.0% CAGR. The growth outlook has improved.\nYet BABA is now trading at some of the lowest valuations in its history, resulting in 27% CAGR consensus return potential through 2027, and 6X the risk-adjusted expected returns of the S&P 500 for the next five years.\nThanks to the potential to become one of the best dividend growth blue-chips of tomorrow, I've invested almost $50,000 into BABA, and am willing to invest up to $100K if it keeps falling in the short term. For those comfortable with the complex risk profile of this company, and who use proper diversification and prudent risk management, BABA represents a potentially life-changing and rich retirement dream-making long-term investment opportunity.\nThis idea was discussed in more depth with members of my private investing community, The Dividend Kings.Get started today »\n\nIt's been a volatile few weeks for stocks, but tech stocks in particular.\nWhile the S&P 500 is just barely off its recent all-time highs, the Nasdaq has fallen 6%. And of course, it's a market of stocks, not a stock market. Individual tech stocks are in corrections or even bear markets.\n\ntech stocks in general, are now in a pullback\ninduced by rising rate concerns\n\nWhy Rising Rates Are NOT A Concern For Prudent Long-Term Investors\nIn the modern era, primarily the last 25 years, all stocks have done well in rising long-term rate environments.\n(Source: Ben Carlson)\n\ngrowth, value, small, large, didn't matter, stocks went up as rates rose\n\n\nA study from JPMorgan(NYSE:JPM)found that from 1963 through 2019 stocks generally went up as long as 10-year yields were under 5%.\nGoldman Sachs'(NYSE:GS)head of quantitative research finds that the rate of interest rate is more important than the actual rate itself\n37+ basis points per month is the tipping point strongly correlated with short-term corrections\nin the last month, 10-year yields are up 39 basis points\na level that is historically correlated with mild and short market declines\nin other words, this stock market dip is 100% normal and expected by prudent investors who understand market history\n\nEven so-called \"bond alternatives,\" such as REITs, are not hurt by rising long-term rates.\n\nFrom 1972 to 2018 the % of REIT total returns explained by 10-year yields was just 2%\nhad you been able to predict interest rates with perfect precision, you couldn't have predicted actual REIT returns\n\nPrudent long-term investors know that you don't actually have to predict interest rates to be successful.\n\nlong-term interest rates are just one of many factors that determine company success over time\nand have a relatively small impact on fundamental growth rates\nbond prices are 100% a function of credit quality and LT interest rates\nstock prices are 91% a function (over the long-term) of fundamentals and valuations\nother than generating income, stocks and bonds are different asset classes that are nothing alike\nno stock is EVER a true \"Bond alternative\" because of this fundamental fact\n\n\n\nIf you focus on the trinity of yield + growth + valuation you are optimizing the fundamentals that drive 91% of long-term stock returns.\n\ncombining the 3 core fundamentals of long-term total returns with prudent risk management = practicing disciplined financial science\n\nMy Personal Phoenix Retirement Portfolio Fundamentals (75% Dividend Stocks/25% Growth Stocks)\n\naverage quality: 10.7/12 SWAN vs. 10.9 average aristocrat\naverage safety score: 4.8/5 very safe vs. 4.7 average aristocrat\naverage credit rating: A- stable vs. A- stable average aristocrat (2.5% 30-year bankruptcy risk)\nthe yield on cost: 3.8%\ncurrent yield: 3.3% vs. 1.6% S&P, 2.1%dividend aristocrats (our equity benchmark) and1.8% a 60/40 stock/bond portfolio\nMorningstar long-term growth forecast: 16.2% CAGRvs. 6.4% S&P 500 & 7.0% dividend aristocrats\nDividend growth forecast: 7.0% CAGR= almost 4X the rate of inflation, double every decade (every 15-years in inflation-adjusted dollars)\nweighted average forward PE: 16.6 vs. 18.9 historical norm vs. 21.9 S&P 500\naverage discount to fair value (Morningstar estimate): 12%vs. -32% S&P 500 and -13% aristocrats\n5-year analyst consensus total return potential: 3.3% yield + 16.2% CAGR long-term growth +2.6% CAGR valuation boost =22.1%CAGRvs. 6.5% S&P 500\nRisk-Adjusted Expected Return: 16.2% CAGRvs. 4.0% CAGR S&P 500 (4.0X market's expected return)\nLT Consensus Total Return Potential:3.3% yield on cost + 16.2% growth =19.5% CAGRvs. 8.0% S&P 500 and 9.1% dividend aristocrats\n\nHow does a double the market's yield and LT growth consensus sound?\nHow about the potential to quadruple the S&P 500's returns over the next five years and more than double the market's long-term consensus return potential?\nYou can't find that in any index fund, you have to build yourself. That's what DK Phoenix has been doing for almost a year, via a combination of opportunistic limit buying and dollar-cost averaging.\n\nI've invested about $500,000 of my life savings into the DK Phoenix strategy\nI'm definitely eating my own cooking\n\nThe results so far have been spectacular. 40% gains from a portfolio that started out 100% bonds and has been buying every single day, including during record highs and overvalued markets.\nMore importantly, this portfolio is generating an ocean of very safe, and steadily growing dividends.\n\nduring the Great Recession S&P 500 dividends down 25%\nthis portfolio's dividends were flat\n\nHowever, I want to point out how the potential combination of strong yield + fantastic growth potential and attractive valuations means this portfolio is potentially set up for returns on par with the greatest investors in history.\n\nBut not from some complex or risky asset you have to manage and tie up your money in for seven to 15 years (as with hedge funds), but a 100% liquid world-class blue-chip investment.\n\nblue-chip dividend investing at its finest\nhigh-probability/low risk buys that are 91% likely to meet our goals over the long-term\n\nNote that this portfolio is 25% growth stocks, though every growth company is one I expect to eventually pay a dividend.\nWhether it takes 5 or 50 years doesn't matter to me, because I have 75% of my portfolio generating over $20,000 per year in very safe income that rises in any economic or market condition.\nWhy I'm Backing Up The Truck On Alibaba In This Tech Pullback\nMy personal Phoenix retirement portfolio is what tracks every Dividend Kings Daily Blue-Chip Deal Video Recommendation.\n\n\nI've bought Alibaba (BABA) 87 times since April 2020\ninvesting a total of about $47,000\nabout 6.9% of my personal Phoenix portfolio (100 companies)\nmy personal risk cap on BABA is $100,000 for the next 20 years, 10X less than what I plan to invest in Amazon(NASDAQ:AMZN)\nmy goal is to invest $1 million into Amazon in my lifetime, as fast as I can\nbut still a potentially life-changing and rich retirement making investment (see reason five)\n\nWhy am I willing to put up to $100,000 of my hard-earned savings to work in this speculative hyper-growth blue-chip?\nFor the same 6 reasons that BABA at today's outrageously attractive valuation might be just what your diversified and prudently risk-managed portfolio needs.\nReason 1: An Extremely High-Quality Company\nThe Dividend Kings motto is \"Quality first and prudent valuation and sound risk management always.\"\nAlibaba Overall Quality: 80% = 10/12 Speculative SWAN\n\n\n\nBABA\nFinal Score\nRating\n\n\nBalance Sheet Safety\n88%\n5/5 Very Safe\n\n\nBusiness Model\n90%\n3/3 Wide and Stable Moat\n\n\nDependability\n68%\n2/4 Above-Average Dependability\n\n\nTotal\n80%\n10 (SWAN) - Speculative\n\n\n\n(Source:Dividend Kings Safety & Quality Tool) updated at the start and end of each day\n\nunchanged from last quarter\n\nDK overall quality scores factor in about 100 fundamental metrics covering\n\ndividend safety\nbalance sheet strength\nshort and long-term bankruptcy risk\naccounting and corporate fraud\nprofitability and business model\nlong-term sustainability\nmanagement quality\ndividend friendly corporate culture/income dependability\n\nAlibaba Is the 136th Highest Quality Master List Company (Out of 490)\n\n(Source: DK Safety & Quality Tool) updated at the end of each day, sorted by overall quality score\nThe DK Master List includes every dividend aristocrat, king, champion, and 12/12 Ultra SWAN quality company. Among the highest quality companies on earth, BABA ranks 136th.\nAlibaba's 80% quality score means its similar in quality to such 10/12 SWANs, 11/12 Super SWANs, and 12/12 Ultra SWANs as\n\nGeneral Dynamics (GD): non-speculative dividend aristocrat\nsalesforce.com (CRM): non - speculative hyper-growth\nRoyal Bank of Canada (RY): non - speculative\nUnitedHealth Group (UNH): non - speculative\nFacebook (FB): non - speculative hyper-growth\nCisco (CSCO): non - speculative\nMagellan Midstream Partners (MMP) - non-speculative\nLockheed Martin (LMT) - non -speculative\nTexas Instruments (TXN) - non-speculative\nBritish American Tobacco (BTI) - non-speculative\n\nAll told, our quality score includes 137 fundamental metrics pertaining to dividend safety, long-term dependability, and total returns. Every metric was selected based on\n\ndecades of empirical data\nthe experience of the greatest investors in history\neight rating agencies\nand what blue-chip economists and analyst firms consider most closely correlated to a company's long-term success.\n\nOur goal is to ensure we see fundamental deterioration coming before dividends get cut and a company, in a worst-case scenario, goes bankrupt.\n\neven dividend aristocrats can fail (just ask GE or CTL investors)\neven dividend aristocrats can go bankrupt (just ask Kmart or Winn-Dixie investors)\n\nThere are no sacred cows in the Dividend Kings universe. Where the fundamentals lead we always follow.\n\nthe essence of financial science\n\nReason 2: Remarkable Long-Term Growth Potential\n\n(Source: FactSet Research Terminal)\n\naccording to FactSet the median LT growth consensus from all 59 analysts that cover BABA is 26.0% CAGR\ncollectively these 59 experts know BABA better than anyone other than management\npre-earnings growth consensus was 22.3%\n\n\n\nYCharts LT growth consensus is less bullish but still showing 20% hyper-growth\n\n\n(Source: FAST Graphs, FactSet Research)\n\n5 analyst median FAST Graphs consensus is 25.3% CAGR LT growth\n\nAlibaba Medium-Term Growth Consensus\n\n\n\nMetric\nFiscal 2021 Consensus\n2022 consensus growth\n2023 consensus growth\n2024 consensus growth\n2025 consensus growth\n2026 consensus growth\n\n\nEPS\n39%\n15%\n24%\n23%\n20%\n16%\n\n\nOwner Earnings (Buffett smoothed out FCF)\n-3%\n162%\nNA\nNA\nNA\nNA\n\n\nOperating Cash Flow\n45%\n11%\n18%\n29%\nNA\nNA\n\n\nFree cash flow\n52%\n-1%\n25%\n24%\nNA\nNA\n\n\nEBITDA\n58%\n24%\n23%\nNA\nNA\nNA\n\n\nEBIT (operating profit)\n29%\n40%\n30%\nNA\nNA\nNA\n\n\n\n(Source: FAST Graphs, FactSet Research Terminal)\n20% to 26% CAGR LT growth consensus is one of the fastest of any company on earth, much less a $650 billion behemoth like BABA.\nWhere is BABA's remarkable growth expected to come from?\n\n(Source: earnings presentation)\n\nAlibaba has almost 1 billion users\nand is one of the fastest-growing cloud computing companies on earth\n#1 in cloud computing in China\n\n\n(Source: earnings presentation)\n\nAlibaba is the Amazon/Alphabet/Facebook/PayPal/Microsoft of China\nit's basically a superior quality Chinese Nasdaq index\njust as Amazon is a superior quality alternative to the US Nasdaq\nexcept that BABA has even more optionality than Amazon courtesy of several\"Super Apps\"of which the US has no equivalent\nSuper Apps are basically all the apps you use on a daily basis in one, and in China, they dominate the lives of almost 1.5 billion people\necosystems of steroids, and the ultimate wide-moat businesses\nthe only effective limitation is government regulations (more on this in the risk profile)\n\n\n(Source: FactSet Research Terminal)\n\n27% annualized revenue growth through 2026\nvs. 19% for Amazon\n34% CAGR cloud computing revenue growth\ncore Chinese commerce sales growth 28% CAGR\n\nWith almost 1.5 billion Chinese consumers to tap into, Alibaba's growth runway is very long.\n\nits optionality is among the best of any company on earth\npotentially superior to even Amazon's\n\nAlibaba Consensus Profitability Forecast\n\n\n\nYear\nSales\nFCF\nEBITDA\nEBIT\nNet Income\n\n\n2020\n$71,376\n$18,634.0\n$22,077.0\n$12,803.0\n$20,902.0\n\n\n2021\n$109,049.0\n$30,666.0\n$32,294.0\n$18,332.0\n$26,210.0\n\n\n2022\n$142,453.0\n$33,923.0\n$40,043.0\n$24,985.0\n$27,169.0\n\n\n2023\n$172,942.0\n$39,671.0\n$49,694.0\n$33,156.0\n$34,068.0\n\n\n2024\n$215,267.0\n$45,789.0\n$59,475.0\n$43,961.0\n$43,031.0\n\n\n2025\n$264,808.0\nNA\n$72,896.0\n$57,133.0\n$54,736.0\n\n\n2026\n$296,476.0\nNA\n$95,192.0\n$70,453.0\n$63,654.0\n\n\n\n\n\n\nYear\nFCF Margin\nEBITDA Margin\nEBIT Margin\nNet Margin\n\n\n2020\n26.1%\n30.9%\n17.9%\n29.3%\n\n\n2021\n28.1%\n29.6%\n16.8%\n24.0%\n\n\n2022\n23.8%\n28.1%\n17.5%\n19.1%\n\n\n2023\n22.9%\n28.7%\n19.2%\n19.7%\n\n\n2024\n21.3%\n27.6%\n20.4%\n20.0%\n\n\n2025\nNA\n27.5%\n21.6%\n20.7%\n\n\n2026\nNA\n32.1%\n23.8%\n21.5%\n\n\n\n(Source: FactSet Research Terminal)\n\nAlibaba is still relatively early in its growth cycle\ninvesting very heavily into R&D and growth capex: $12.6 billion in 2020\n$37.2 billion growth spending consensus in 2026\nyet analysts expect already impressive profitability to remain relatively stable during the next five years\n\nAlibaba Consensus Potential Future Dividend Forecast\n\n\n\nYear\nFCF/Share Consensus\nDividend Per Share (50% Payout Ratio)\nYield On Today's Cost\nConsensus Yield Potential\n2026 Consensus Price\n\n\n2020\n$6.98\n$3.49\n1.47%\nNA\nNA\n\n\n2021\n$8.95\n$4.48\n1.88%\n1.39%\n$323.00\n\n\n2022\n$10.70\n$5.35\n2.25%\n1.41%\n$379.00\n\n\n2023\n$13.84\n$6.92\n2.91%\n1.48%\n$466.00\n\n\n\n(Source: FactSet Research Terminal)\n\nif Alibaba were to start paying 50% of its FCF as dividends then by 2023 that would equal a yield on cost of almost 3% and 1.5% consensus yield\n\nWhy do I expect BABA to eventually start paying dividends?\nAlibaba Consensus Balance Sheet Forecast\n\n(Source: FactSet Research Terminal)\n\ndespite spending $37 billion to fund growth in 2026, analysts expect BABA to end fiscal 2026 with $275 billion in cash and $260 billion in net cash\nmore than Apple(NASDAQ:AAPL)had when it started buying back stock and paying dividends\n\nWhat's more, by 2024 alone analysts expect BABA's annual free cash flow to reach $46 billion.\n\n(Source: FactSet Research Terminal)\n\nif FCF grows at the 26% LT EPS growth consensus rate then by 2026 $73 billion in annual free cash flow\n\nThe bottom line on BABA is that it's the #1 global digital retailer but so much more. And it has the potential to make patient long-term investors extremely wealthy and eventually fund comfortable retirements from future dividends alone.\n\nwhat I call my \"Jack Ma retirement plan\"\n\nYet despite this incredible quality and growth potential, the market is mispricing BABA to a remarkable degree right now.\nReason 3: One Of Most Undervalued Tech Stocks In The World\n\n\n\nMetric\nHistorical Fair Value Multiples (all-years)\nFiscal 2021\nFiscal 2022\nFiscal 2023\n\n\nEarnings\n32.2\n$334\n$386\n$480\n\n\nOwner Earnings (Buffett smoothed out FCF)\n24.6\n$218\n$572\nNA\n\n\nOperating Cash Flow\n23.1\n$325\n$362\n$428\n\n\nFree Cash Flow\n30.7\n$338\n$336\n$421\n\n\nEBITDA\n33.2\n$389\n$485\n$597\n\n\nEBIT (operating income)\n45.1\n$298\n$416\n$541\n\n\nAverage\n$307\n$413\n$485\n\n\nCurrent Price\n$237.76\n\n\nDiscount To Fair Value\n23%\n42%\n51%\n\n\nUpside To Fair Value\n29%\n74%\n104%\n\n\nAnnualized Total Return Potential\nNA\n74%\n46%\n\n\n\n(Source: F.A.S.T. Graphs, FactSet Research)\nBABA is trading at a 42% discount to fiscal 2022 consensus fundamentals (which ends March 2022)\n\nA return to average historical fair value by the end of March 2023 would result in a 46% CAGR total return\n2021 fair value range: $336 to $572\n2021 Harmonic Average Fair Value (smooths out outliers): $413\n\nEven using the most conservative fair value of $336, BABA is still 29% undervalued and a potentially good speculative buy.\n(Source: FAST Graphs, FactSet Research)\n\non a blended PE basis, BABA is now tied for the lowest valuation in its history on the NYSE\nin other words, if you've ever wanted to buy BABA, now is the time\nvery likely to be near its eventual bottom\n\nI know that a lot of readers are now thinking \"sure, consensus estimates say BABA is a growth powerhouse, BUT what if analysts are wrong.\"\nThere is one thing we know for certain about all growth consensus estimates.\n\nthey are wrong\nthe question is how much\n\nAlibaba Analyst Scorecard\n\n\nDespite a highly complex business model analysts are relatively good at forecasting BABA's growth. Specifically, the company has only missed two-year earnings growth forecasts twice out of the six years that analysts have offered them.\n\nthe margin of error 20% to the upside and downside (modern era with lots of analyst coverage)\nlong-term growth consensus range: 20.0% to 26% CAGR\nlong-term growth consensus (from all 60 analysts ): 25.3% CAGR\nthe margin of error adjusted long-term growth consensus range: 16% to 32% CAGR\n\n\n(Source: F.A.S.T. Graphs, FactSet Research)\nThe current analyst consensus of 26.0% CAGR is similar to the growth rate of the last five years. The historical growth range since BABA came to the NYSE is 20% to 44% CAGR.\nThe secular growth catalysts represented by BABA's dominance in Chinese digital payments, banking, cloud computing, online retail, digital marketing, etc., means that I consider the analyst growth consensus range reasonable and achievable.\nStricter regulations are not expected to hamper BABA's growth significantly, according to the 60 analyst median consensus.\nReason 4: Total Return Potential That Could Make You Rich\n\nfor non-dividend stocks, total returns generated from growth and valuation mean reversion is the entire point for most investors\nBABA's consensus return potential is outstanding\n\nBABA 2023 Consensus Return Potential\n\n(Source: F.A.S.T. Graphs, FactSet Research)\nIf BABA grows as analysts expect through March 2023, and returns to historical fair value, then investors could expect\n\n102% total returns\n39.9% CAGR returns\nvs. 2.9% CAGR S&P 500\n14X better than the S&P 500\n\nAlibaba March 2027 Consensus Return Potential\n\n(Source: F.A.S.T. Graphs, FactSet Research) - actual consensus EPS estimates through 2026\nIf BABA grows as analysts expect through March 2027, and returns to historical fair value, then you could expect\n\n324% total returns, more than quadrupling your investment\n26.8% CAGR returns\nvs. 6.5% CAGR S&P 500\n\nOver the very long term, here's what analysts expect.\n\n0% yield + 26.0% CAGR growth = 26.0% CAGR total returns (16% to 32% CAGR range)\nvs. 8.0% CAGR S&P 500 and 9.1% CAGR dividend aristocrats\n\nReason 5: Total Return Potential That Could Turn Thousands Into Tens Of Millions Over Decades\nWhat does potential hyper-growth sustained over many years and decades look like? Generation wealth, that can not just fund your rich retirement, but that of your children and grandchildren as well.\nAlibaba 30-Year Monte Carlo Simulation, Statistical Inflation+ Tax Adjusted Total Return Forecast\n\n\n\nMonte Carlo simulation results for 5000 portfolios with $1,000 initial portfolio balance using available statistical model data from Jan 2015 to Dec 2020.Returns were modeled as correlated random samples from a multivariate normal distribution.The historical pre-tax return for the selected portfolio for this period was 21.09% mean return (14.38% CAGR) with a 36.62% standard deviation of annual returns.The simulated asset returns were adjusted based on provided tax assumptions.The simulated inflation model used historical inflation with a 1.75% mean and 0.94% standard deviation based on the Consumer Price Index (CPI-U) data from Jan 2015 to Dec 2020.The generated inflation samples were correlated with simulated asset returns based on historical correlations.The available historical data for the simulation inputs was constrained by Alibaba Group Holding Limited (BABA) [Oct 2014 - Feb 2021]. (Source: Portfolio Visualizer)\n\nBABA's historical returns are depressed because it's currently in a bear market. Yet even if it delivers historical returns over the next 30 years, the standard retirement time frame there is an 80% statistical probability that\n\n$1,000 invested today becomes $6,500 to $324,000\nadjusted-for inflation and taxes\nassuming top tax bracket, including for my home state of MN\n\nWhat if BABA is able to sustain approximately 15% CAGR growth for longer than 30 years? Then a modest investment today could transform into generation wealth.\nAlibaba 75-Year Monte Carlo Simulation, Statistical Inflation+ Tax Adjusted Total Return Forecast\n(Source: Portfolio Visualizer)\n\nwith a $75,000 total investment, made at the best valuations in five years, there is a very good statistical chance that I will eventually become an Alibaba millionaire\nthere is a decent chance that my children and grandchildren will be Alibaba billionaires\n\nReason 6: One Of The Most Reasonable And Prudent Growth Stocks You Can Buy Today\nI never recommend a company, much less put my own money at risk, without first knowing exactly how prudent a potential investment it is relative to the S&P 500, most people's default alternative.\n\nThe investment decision score is based on valuation and the three core principles of all successful long-term investors.\n\n\n\n\n\n\n\n(Source:Dividend Kings Automated Investment Decision Tool)\nBABA is one of the most reasonable and prudent hyper-growth stocks you can buy today. It offers\n\nobjectively superior quality to the average S&P 500 company (credit ratings and ROC)\nmuch faster growth (3 to 4X faster)\nmuch superior valuation (mirror image of the S&P 500)\n6X the 5-year risk-adjusted expected returns\n\nThat's assuming you're\n\ncomfortable with the risk profile (see dive section)\nown it within a diversified and prudently risk-managed portfolio\n\nAlibaba Risk Profile: Why BABA Isn't Right For EveryoneFundamental Risk Summary\n\n In our view, the most pressing risks to the Alibaba investment thesis are a sustained slowdown in Chinese consumption patterns, e-commerce competition, increased regulatory scrutiny, and the possibility that ancillary businesses divert management's attention and reduce profitability.China's e-commerce landscape has become increasingly competitive, with Pinduoduo registering faster GMV and user growth than Alibaba with the support of Tencent's traffic and its group-buying traffic generation method, and JD.com positioning itself as a credible rival through its fulfillment capability, quality assurance, and its partnerships with Tencent. These platforms do not yet have Alibaba's scale in China, but they specialize in specific products or services, or markets, which might impede Alibaba's growth.Alibaba is also subject to increased online and mobile payment regulation. Financial regulators in China have continuously scrutinized online and mobile payment services. Alibaba has persistently faced the issue of counterfeit and infringing goods on its marketplaces. Hangzhou government's assigning of representatives to work inside Alibaba also raise concerns of some investors, although there is no evidence of consequence of value destruction for Alibaba.Expansion into peripheral businesses might distract management, reduce profitability without materially improve Alibaba's ecosystem. While we're optimistic about Alibaba's ability to become a preferred partner for international retailers and consumer brands looking to sell in China, the firm does not enjoy the same network effect and brand recognition in other countries, and it may face challenges directly expanding in these markets...Like many other Chinese Internet companies listed in overseas markets, Alibaba operates under a\n variable interest entity, or VIE, structuredesigned to let companies bypass Chinese legal restrictions on foreign ownership in certain sectors.Alibaba's foreign investors will essentially hold shares of Alibaba's VIE domiciled in the Cayman Islands. We don't expect any legal challenges to VIE structures by the Chinese government in the future. However, if the legitimacy of Alibaba's related VIE is found to violate applicable law or regulation, Chinese regulatory authorities might take action against the VIE, including revoking the business and operating licenses of Alibaba's subsidiaries or the VIE, or discontinuing, restricting, or restructuring Alibaba's operations. Since the Chinese Ministry of Commerce has the jurisdiction to regulate VIEs, we believe overseas investors would have limited legal rights...Despite\n management's proven execution capabilities,\n we have concerns regarding Alibaba's corporate governance, which is reflected in our Poor equity stewardship rating.In our view,\n Alibaba is led by a capable and ambitious management team. Founder and former executive chairman Jack Ma has been the keeper of the flame since the company's founding in 1999. Under his leadership, Alibaba has become China's leading e-commerce player, accounting for the majority of transaction volume for China's online shopping industry.Over the past decade, Taobao has transformed the shopping behaviors of millions of Chinese consumers. We believe management has also done a commendable job developing and preserving Alibaba's wide economic moat by building several other leading online marketplaces and platforms such a Tmall, Juhuasuan, Alibaba.com, AliExpress, Alipay, AliCloud, and Ele.me. Although the company faces a potentially uneven long-term economic backdrop and new sources of competition in China,\n we remain confident that Alibaba can sustain its wide economic moat over the long term under its existing leadership.Ma's decision to step away from Alibaba's executive chairman role in 2019 and the company's board of directors will not affect our positive long-term bias for two reasons. First,\n we believe recent results demonstrate that Alibaba has a deep management bench,\n including current CEO Daniel Zhang(who was appointed CEO of Alibaba Group in May 2015, will assume the chairman role in 2019, and played a central role in the development of the Singles Day shopping event, building the Tmall platform from a regional to global business-to-consumer platform, and deploying several of Alibaba's \"New Retail\" strategies) and executive vice chairman Joe Tsai. Second, we believe Ma's involvement with the Alibaba Partnership--a group of core company managers--will allow him to stay involved with key strategic decisions...We harbor concerns about Alibaba's partnership structure, which might jeopardize the board's independence.The partnership is led by a committee of five, including Ma, executive vice chairman Joe Tsai, and CEO Daniel Zhang. The Alibaba Partnership has the exclusive right to nominate or appoint up to a simple majority of the members of its board of directors.Any board candidate it nominates is presented to shareholders for voting. If the candidate is not elected by shareholders, the partnership can appoint another candidate without a vote. That candidate will serve as an interim director until the next annual general meeting, where either the same candidate or yet another nominee proposed by Alibaba partners will stand for election.The current board of directors is composed of 11 directors, five of which are Alibaba Partnership nominees. Alibaba Partnership can also nominate or appoint two additional directors to the board, which would increase the number of directors to 13, and the Partnership will get majority control of the board.\n The Partnership essentially controls the board and limits the influence of outside shareholders.\" - Morningstar (emphasis added)\n\nMSCI, Reuters and Morningstar, as well as S&P, Fitch, and Moody's have concerns about BABA's corporate governance, which is factored into each company's respective rating on BABA's credit and material ESG risk (more on that later).\n\nall Chinese companies are speculative\nthus requiring a 5% higher margin of safety to be a potentially good buy (20% in the case of BABA)\ninvestors not comfortable with BABA's complex risk profile should not own it\nno company is right for everyone\n\nAlibaba ESG Risk Analysis: An Important Component Of A Company's Overall Financial Risk Profile (But Especially For Chinese Tech Companies)\n\ncritically important to anyone concerned about corporate governance and potential accounting fraud\n\nIn today's hyperpolarized political climate, some investors consider ESG to be political/personal ethics/opinion-driven nonsense.\nESG as measured by institutions is NOT simply the concern of \"woke\" and \"on-trend\" hippy millennials trying to virtue signal to impress Silicon Valley venture capitalists or social media followers.\n\n Companies with strong ESG profiles may be better positioned for future challenges and experience fewer instances of bribery, corruption, and fraud.\" - MSCI\n\nAccording to the world's best risk-assessors, ESG metrics are a critical component of a company's overall risk profile. Here's who considers ESG important and builds it into their safety models and ratings.\n\nBlackRock - #1 asset manager in the world\nMSCI - #1 indexing giant\nMorningstar\nReuters/Refinitiv\nISS (Institutional Shareholder Services) - #1 corporate proxy firm on earth\nS&P\nFitch\nMoody's\nDBRS (Canadian credit rating agency)\nAMBest (insurance industry rating agency)\n\nThe reason some investors consider ESG to be political is that some investors consider some industries to be inherently \"evil\" such as tobacco, energy, big tech, pharma, health insurers, fast-food, snack foods, and defense contractors.\n\nsuch opinions are personal and based on individual ethics\nESG scores as calculated by institutions are quantitatively based and focused on only fundamental financial risks to the underlying business\nthey are compared against industry peers and as objective as can be realistically expected\n\nPersonal ethical or political opinions are not what rating agencies or asset managers care about.\nMSCI rates over 2,800 global companies on 37 ESG metrics, using a quantitative and qualitative approach, just as all the rating agencies do, and Ben Graham recommended.\n\n Our global team of 185 experienced research analysts assesses thousands of data points across 37 ESG Key Issues, focusing on the intersection between a company's core business and the industry issues that can create significant risks and opportunities for the company. Companies are rated on an AAA-CCC scale\n relative to the standards and performance of their industry peers...\n\n\n\n The MSCI ESG rating model seeks to answer four key questions about companies:• What are the most significant ESG risks and opportunities facing a company and its industry?• How exposed is the company to those key risks and/or opportunities?• How well is the company managing key risks and opportunities?• What is the overall picture for the company and how does it compare to its global industry peers?\" - MSCI\n\n\n(Source: MSCI)\nThe ESG scores you find from the best risk-assessors in the world are not opinions based on political correctness.They use a quantitative approach to fundamental company risk analysis.One based on decades of historical data pertaining to minimizing the risk of fundamental deterioration, bankruptcy, and stock/bond investors getting wiped out.\n\nESG risk ratings + trends make up about 20% of the overall DK quality score for most companies that have an ESG rating from MSCI, Morningstar/Sustainalytics, and Reuters/Refinitiv\n\n\n\n(Source: MSCI)\n\nbased on the 12 material sustainability factors MSCI's 185 industry experts believe is important to financial risk for midstream companies, BABA scores are in the bottom 37% of its peers (below average)\nthat score is has been improving over the last four years\nthough it dipped one level in the 2020 annual update\n\nHow Morningstar/Sustainalytics Assesses Long-Term ESG Financial Risk\n\nMorningstar/Sustainalytics cares about material ESG variables that are historically correlated to a company's enterprise value (market cap + net debt)\nFinancial risk NOT political/personal ethical opinions are what Morningstar assesses\n20 fundamental metrics analyzed, compared to industry peers\n100 point risk scale\nlower is better\n\n\n\n\n\n\nEvery controversy surrounding BABA is factored into Morningstar ESG risk rating. That includes the controversies around anti-trust practices for which it's now under investigation by Chinese regulators.\n\nMorningstar considers this to be a medium ESG risk industry\nand management is doing an average job of managing that risk\nMorningstar scores BABA 26.2 \"medium risk\" in the bottom 25% of tech companies and in the top 43% of all 13,645 companies Morningstar rates\nrisk rating increased from 24.6 to 26.2 in the past year due to increasing regulatory concerns\n\nReuters/Refinitiv also provides ESG financial risk ratings.\n\nover 150 industry experts covering over 7,000 global companies\nbased on 400+ fundamental metrics\nand 178 materially important financial ESG risk factors\n\n\n\n\n(Source: Refinitiv)\n\n(Source: Interactive Brokers)\n\nReuters ranks BABA as in the bottom 30% of its peers on actual financial ESG risk\nin the top 40% in terms of environmental issues\nbottom 30% for social\nbottom 20% for corporate governance\nand near the very bottom of its industry on controversies\nfor a combined score that's in the bottom 10% of its peers\nwhich is why BABA's dependability score fell from 75% to 68% and resulted in a downgrade from 11/12 to 10/12 speculative quality (about two months ago)\nand why I'm looking to invest a maximum of $100K into BABA vs. $1 million into far lower risk Amazon\nrisks with BABA are far higher than with AMZN\n\nWhen no less than 10 of the world's most reputable risk assessors say something is important to long-term financial risk for a company you can be sure that Dividend Kings will include it in our 61 metric safety model and 126 point quality score (converted to a 100% scale).\n\nthere is no such thing as a \"risk-free\" company\nfactoring in all material financial risks is how you determine whether a company is appropriate for your needs\nand how we determine the margin of safety required to compensate us for that risk and thus determine potentially good buy prices or better\nno average investor can ever be a true expert on a company\nbut DK knows where to find the most reliable expert data to create a comprehensive safety, dependability, and quality score that includes every major risk factor a company has\n\nNo less than Ben Graham, the father of securities analysis considered qualitative factors critical to making prudent long-term investing decisions.\n\n... a satisfactory statistical exhibition is a necessary though by no means a sufficient condition for a favorable decision by the analyst.\"-Benjamin Graham, Security Analysis (1951 ed.), Page 76\n\nIn other words, Graham considered a combination of quantitative and qualitative analysis, looking at the past, present, and likely future, to be the optimal strategy for making sound long-term investments.\n\nDividend Kings uses risk ratings from eight of the world's most reputable agencies\nif fundamentals weaken our model will know it and our scores, ratings, and recommendations will change accordingly\n\nBottom Line: Alibaba Is Set To Soar And Too Cheap To Ignore\nI can't tell you what any stock will do over the next few weeks, months or even a year or two.\n\naccording to JPMorgan Asset Management, 92% of 12-month returns are a function of luck\nover 10+ years 90% to 91% of returns are a function of fundamentals\nover the long-term fundamentals are 11X as powerful as luck\n\nAlibaba represented one of the most undervalued hyper-growth tech blue-chips before this interest rate pullback in tech began.\nAlibaba's recent decline has been sharper than many peers, which isn't justified by its recent earnings results, or overall fundamentals.\nThe long-term growth outlook has gotten better, not worse.\nWhile BABA will always be an inherently speculative company, for those comfortable with the risk profile, a 42% margin of safety more than compensate for the risks you're facing.\nIn the coming years, BABA has the potential to deliver Buffett-like returns that are almost 6X the risk-adjusted returns of the S&P 500.\nEventually, the cash pile will grow so large, the company will be forced to start buying back stocks and paying dividends.\nA modest investment in BABA today could fund a comfortable or even lavish retirement purely from future dividends in a few decades.\nPrudent long-term investors know that through a disciplined application of financial science we never have to pray for luck. We make our own luck over time.\nWhen it comes to Alibaba, as close to a perfect hyper-growth blue-chip investment as exists on Wall Street today, the time to make our own luck is now.","news_type":1},"isVote":1,"tweetType":1,"viewCount":517,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":365930413,"gmtCreate":1614687430632,"gmtModify":1704774015341,"author":{"id":"3574558286837472","authorId":"3574558286837472","name":"Mxtinhzq","avatar":"https://static.tigerbbs.com/c915c3b8303c6bd800f52c911a79390f","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3574558286837472","authorIdStr":"3574558286837472"},"themes":[],"htmlText":"Would never buy Tesla stock on its own. Willonly buy ETF that includes with Tesla. Less risky.","listText":"Would never buy Tesla stock on its own. Willonly buy ETF that includes with Tesla. Less risky.","text":"Would never buy Tesla stock on its own. Willonly buy ETF that includes with Tesla. Less risky.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/365930413","repostId":"1105841550","repostType":4,"repost":{"id":"1105841550","kind":"news","pubTimestamp":1614600153,"share":"https://ttm.financial/m/news/1105841550?lang=&edition=fundamental","pubTime":"2021-03-01 20:02","market":"us","language":"en","title":"'Build Me An Ark': The Tsunami Of Risk Of Tesla-Bitcoin-Cathie Wood Is Coming","url":"https://stock-news.laohu8.com/highlight/detail?id=1105841550","media":"zerohedge","summary":"Summary:\n\n In today's equity update we are following up on our\n analysis of the Tesla-Bitcoin-Ark ri","content":"<p><u><b>Summary:</b></u></p>\n<blockquote>\n In today's equity update we are following up on our\n <b>analysis of the Tesla-Bitcoin-Ark risk cluster</b>showing an updated positions analysis, cross-correlations in the flagship Ark Innovation ETF, and an drawdown analysis. Yesterday, was another bad session for this risk cluster and Ark Invest had a day with outflows across all their ETFs highlighting that risk sentiment has changed. With the founder's bold move to increase the position in Tesla during the week the risk has gone up that this risk cluster could turn into an ugly forced selling dynamic causing pain in not only Tesla, Bitcoin, and Ark funds, but also US biotechnology stocks where Ark Invest is a major holder with high ownership in selected names.\n</blockquote>\n<p>A little over a month ago we first flagged the Tesla-Bitcoin-Ark risk cluster as something to take note off as short-term correlation between Tesla and Bitcoin was shooting up. A survey from Charles Schwab also confirmed our suspicion that there is a big overlap as these two instruments are among the top five holdings by millennials. Our analysis quickly led us to Ark Invest with its famous Ark Innovation ETF which had a big position in Tesla and its charismatic founder Cathie Wood is a big believer in the so-called disruptive innovation culture of Silicon Valley. This class of people believe firmly in technology as mainly good for society in all its aspects and that&nbsp;Bitcoin is a protection against future wealth confiscation&nbsp;which is most likely inevitable due to historically high wealth inequality.</p>\n<p>This disruptive innovation culture is powerful. It is presented by some of the wealthiest people of this planet. Endless presentation about innovation and institutions like the Singularity University promote these views. Behind Bitcoin you find a huge online marketing machine sucking ordinary people into the game. Recently wealthy people such as Elon Musk has openly supported Bitcoin, first in writing and later in action adding $1.5bn to Tesla’s balance sheet and thereby significantly increasing its earnings volatility. The triangle of Tesla-Bitcoin-Ark and their respective momentum has reinforced each other creating a positive feedback loop luring more investors into these instruments. As we have seen this week the ‘tower of risk’ is beginning to show cracks.</p>\n<p><b>Ark position update and Cathie Wood’s bold move and the risk to biotechnology</b></p>\n<p>This week Tesla-Bitcoin-Ark all came under pressure from negative voices in governments over Bitcoin and beginning noise over real competition for Tesla in the coming years. The risk cluster was clearly moving together, and correlations started rising. On Tuesday, volatility picked up across the board and at one point Cathie Wood felt it was necessary to go public supporting her funds and said that&nbsp;she had increased their position in Tesla&nbsp;using big numbers in the future to justify increasing the risk. This is a bold move, but it increases the risk considerably. When you are at risk of seeing sizeable outflows, you should start reducing the most illiquid positions first while you can control the situation. Because if you are forced to do it by redemptions the game changes dramatically.</p>\n<p>The tables below show updated Ark Invest positions as of yesterday’s close. There are still 26 stocks where Ark Invest holds more than 10% of the outstanding shares. This could become a serious problem if Ark Invest is suddenly caught in a negative feedback loop together with Tesla and Bitcoin. But also note how US biotechnology stocks are overrepresented in this list of stocks with high ownership in percentage of outstanding shares. If Ark Invest suddenly experience across the board outflows, like it did yesterday, then they can suddenly be the forced seller in US biotechnology stocks where they are the whale. This could cascade into the overall US biotechnology segment although the group is diverse.</p>\n<p><i>Stocks held by Ark Invest funds with combined ownership above 10% of outstanding shares</i></p>\n<p><img src=\"https://static.tigerbbs.com/b97684f80243d32efc06f3379d51d4fb\" tg-width=\"500\" tg-height=\"353\">Source: Ark Invest, Bloomberg, and Saxo Group</p>\n<p>The table below shows the largest positions across all funds. Here Tesla has now jumped to 7% of AUM and the first five positions now account for 21.6% of AUM. The five biggest stocks are Tesla, Teladoc Health, Square, Roku, and Baidu. Square just recently reported disappointing Q4 earnings and announced the purchase of $170mn of Bitcoin increasing the risk and feedback loop further in this risk cluster. In the Ark Innovation ETF itself, Tesla is now 10.2% of assets and together with Roku (6%) and Square (5.4%) these three stocks represent 21.6% of assets. If you look at the 10 largest positions in the Ark Innovation ETF then the red thread is that they all come with very high equity valuations and thus low implied equity risk premiums. They are all also mostly equity financed, except for Tesla, which means that the WACC, cost of capital, predominantly come from the cost of equity. With low implied equity risk premiums, the risk-free rate dominates much more than for a company such as say Microsoft or Apple. This means that the rising interest rates could suddenly cause a huge shift in equity valuations. Not because the future is different but because the cost of capital has changed.</p>\n<p><i>Top positions in terms of Ark Invest AUM across all funds</i></p>\n<p><img src=\"https://static.tigerbbs.com/7e06fcb66d5a52e629b48c9cab492586\" tg-width=\"500\" tg-height=\"302\">Source: Ark Invest, Bloomberg, and Saxo Group</p>\n<p><u><b>Correlations on the rise and drawdown outlier</b></u></p>\n<p>The best sign of risk going haywire is always fast rising cross-correlations whether it is on asset classes or single stocks. The chart below shows the 10-day moving cross-correlation in the Ark Innovation ETF since early 2020. It has recently moved to around 0.6 and while it is not a new record the direction is up and has been fast coming from only 0.2 from a few weeks ago. The next week will be critical for the Tesla-Bitcoin-Ark risk cluster as negative feedback loops can be violent and very unpredictable in their outcome.</p>\n<p><img src=\"https://static.tigerbbs.com/ab96aaafda10c2371b1d3a1a14c4a48a\" tg-width=\"500\" tg-height=\"280\"><i>Source: Bloomberg and Saxo Group</i></p>\n<p>Another way of looking at risk is by plotting Ark Innovation ETF drawdowns against that of Nasdaq 100 since December 2015.<b>The ETF has typically experienced a drawdown that is 1.22 times larger than that of Nasdaq 100</b>. As of yesterday, the ratio stands at 2.44 and thus illustrates that something idiosyncratic is taking place at Ark Innovation ETF.</p>\n<p><img src=\"https://static.tigerbbs.com/80db26e42e2910071718ff22a1ff3f2b\" tg-width=\"500\" tg-height=\"308\"><b>If outflows continue today and Tesla comes under pressure again then this indicator could very well hit a new record in terms of being an outlier signaling a negative feedback loop on risk has started.</b></p>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>'Build Me An Ark': The Tsunami Of Risk Of Tesla-Bitcoin-Cathie Wood Is Coming</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\n'Build Me An Ark': The Tsunami Of Risk Of Tesla-Bitcoin-Cathie Wood Is Coming\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-03-01 20:02 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.zerohedge.com/markets/build-me-ark-tsunami-risk-tesla-bitcoin-cathie-wood-coming><strong>zerohedge</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary:\n\n In today's equity update we are following up on our\n analysis of the Tesla-Bitcoin-Ark risk clustershowing an updated positions analysis, cross-correlations in the flagship Ark Innovation ...</p>\n\n<a href=\"https://www.zerohedge.com/markets/build-me-ark-tsunami-risk-tesla-bitcoin-cathie-wood-coming\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"ARKK":"ARK Innovation ETF","ARKQ":"ARK Autonomous Technology & Robotics ETF","ARKR":"Ark Restaurants Corp","ARKW":"ARK Next Generation Internation ETF","GBTC":"Grayscale Bitcoin Trust","ARKF":"ARK Fintech Innovation ETF","TSLA":"特斯拉","ARKG":"ARK Genomic Revolution ETF"},"source_url":"https://www.zerohedge.com/markets/build-me-ark-tsunami-risk-tesla-bitcoin-cathie-wood-coming","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1105841550","content_text":"Summary:\n\n In today's equity update we are following up on our\n analysis of the Tesla-Bitcoin-Ark risk clustershowing an updated positions analysis, cross-correlations in the flagship Ark Innovation ETF, and an drawdown analysis. Yesterday, was another bad session for this risk cluster and Ark Invest had a day with outflows across all their ETFs highlighting that risk sentiment has changed. With the founder's bold move to increase the position in Tesla during the week the risk has gone up that this risk cluster could turn into an ugly forced selling dynamic causing pain in not only Tesla, Bitcoin, and Ark funds, but also US biotechnology stocks where Ark Invest is a major holder with high ownership in selected names.\n\nA little over a month ago we first flagged the Tesla-Bitcoin-Ark risk cluster as something to take note off as short-term correlation between Tesla and Bitcoin was shooting up. A survey from Charles Schwab also confirmed our suspicion that there is a big overlap as these two instruments are among the top five holdings by millennials. Our analysis quickly led us to Ark Invest with its famous Ark Innovation ETF which had a big position in Tesla and its charismatic founder Cathie Wood is a big believer in the so-called disruptive innovation culture of Silicon Valley. This class of people believe firmly in technology as mainly good for society in all its aspects and that Bitcoin is a protection against future wealth confiscation which is most likely inevitable due to historically high wealth inequality.\nThis disruptive innovation culture is powerful. It is presented by some of the wealthiest people of this planet. Endless presentation about innovation and institutions like the Singularity University promote these views. Behind Bitcoin you find a huge online marketing machine sucking ordinary people into the game. Recently wealthy people such as Elon Musk has openly supported Bitcoin, first in writing and later in action adding $1.5bn to Tesla’s balance sheet and thereby significantly increasing its earnings volatility. The triangle of Tesla-Bitcoin-Ark and their respective momentum has reinforced each other creating a positive feedback loop luring more investors into these instruments. As we have seen this week the ‘tower of risk’ is beginning to show cracks.\nArk position update and Cathie Wood’s bold move and the risk to biotechnology\nThis week Tesla-Bitcoin-Ark all came under pressure from negative voices in governments over Bitcoin and beginning noise over real competition for Tesla in the coming years. The risk cluster was clearly moving together, and correlations started rising. On Tuesday, volatility picked up across the board and at one point Cathie Wood felt it was necessary to go public supporting her funds and said that she had increased their position in Tesla using big numbers in the future to justify increasing the risk. This is a bold move, but it increases the risk considerably. When you are at risk of seeing sizeable outflows, you should start reducing the most illiquid positions first while you can control the situation. Because if you are forced to do it by redemptions the game changes dramatically.\nThe tables below show updated Ark Invest positions as of yesterday’s close. There are still 26 stocks where Ark Invest holds more than 10% of the outstanding shares. This could become a serious problem if Ark Invest is suddenly caught in a negative feedback loop together with Tesla and Bitcoin. But also note how US biotechnology stocks are overrepresented in this list of stocks with high ownership in percentage of outstanding shares. If Ark Invest suddenly experience across the board outflows, like it did yesterday, then they can suddenly be the forced seller in US biotechnology stocks where they are the whale. This could cascade into the overall US biotechnology segment although the group is diverse.\nStocks held by Ark Invest funds with combined ownership above 10% of outstanding shares\nSource: Ark Invest, Bloomberg, and Saxo Group\nThe table below shows the largest positions across all funds. Here Tesla has now jumped to 7% of AUM and the first five positions now account for 21.6% of AUM. The five biggest stocks are Tesla, Teladoc Health, Square, Roku, and Baidu. Square just recently reported disappointing Q4 earnings and announced the purchase of $170mn of Bitcoin increasing the risk and feedback loop further in this risk cluster. In the Ark Innovation ETF itself, Tesla is now 10.2% of assets and together with Roku (6%) and Square (5.4%) these three stocks represent 21.6% of assets. If you look at the 10 largest positions in the Ark Innovation ETF then the red thread is that they all come with very high equity valuations and thus low implied equity risk premiums. They are all also mostly equity financed, except for Tesla, which means that the WACC, cost of capital, predominantly come from the cost of equity. With low implied equity risk premiums, the risk-free rate dominates much more than for a company such as say Microsoft or Apple. This means that the rising interest rates could suddenly cause a huge shift in equity valuations. Not because the future is different but because the cost of capital has changed.\nTop positions in terms of Ark Invest AUM across all funds\nSource: Ark Invest, Bloomberg, and Saxo Group\nCorrelations on the rise and drawdown outlier\nThe best sign of risk going haywire is always fast rising cross-correlations whether it is on asset classes or single stocks. The chart below shows the 10-day moving cross-correlation in the Ark Innovation ETF since early 2020. It has recently moved to around 0.6 and while it is not a new record the direction is up and has been fast coming from only 0.2 from a few weeks ago. The next week will be critical for the Tesla-Bitcoin-Ark risk cluster as negative feedback loops can be violent and very unpredictable in their outcome.\nSource: Bloomberg and Saxo Group\nAnother way of looking at risk is by plotting Ark Innovation ETF drawdowns against that of Nasdaq 100 since December 2015.The ETF has typically experienced a drawdown that is 1.22 times larger than that of Nasdaq 100. As of yesterday, the ratio stands at 2.44 and thus illustrates that something idiosyncratic is taking place at Ark Innovation ETF.\nIf outflows continue today and Tesla comes under pressure again then this indicator could very well hit a new record in terms of being an outlier signaling a negative feedback loop on risk has started.","news_type":1},"isVote":1,"tweetType":1,"viewCount":358,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"lives":[]}