Investing in the best Chinese stocks can offer much needed strategic portfolio diversification.
The past few years have been tough for Chinese stocks, weighed down by regulatory changes, geopolitical tensions and a lackluster economy. However, in the past few quarters, we’ve seen these headwinds subside, offering a promising opportunity for investors. Many Chinese stocks, especially the ones discussed in this piece, are deeply undervalued.
Hence, it’s an excellent time to load up on them for the long haul. Moreover, as I discussed in a recent article, billionaire Ray Dalio recognizes the strength of Chinese markets. Dalio’s endorsement of Chinese stocks underscores their appeal in an uncertain market.
Therefore, investing in these three best Chinese stocks to buy would prove ideal for diversifying into this segment and building and balancing your investment portfolio. These stocks are growing at a healthy pace and are positioned for superb gains from their current prices.
Miniso Group (MNSO)
Miniso Group (NYSE:MNSO) is a Chinese trailblazer in the low-cost retail space, with its massive global footprint and dynamic product portfolio. Consequently, it has grown its business at a superb pace, with sales growth exceeding 11% in the past five years. Perhaps what’s more impressive is its EBITDA growth, which stands at 110% over the same period. Moreover, its trailing twelve-month (TTM) free cash flow per share stands at 89 cents, roughly 82% higher than in 2020.
The past two quarters have been excellent for the firm, marked by comfortable top- and bottom-line beats. Revenues have grown by more than 20% in the past few quarters as the firm continues aggressively pursuing its expansion strategy.
The low-cost retailer aims to open 400 new stores in China and more than 600 stores overseas. Moreover, it plans to open 900 to 1,100 new stores annually between 2024 and 2028, underscoring Miniso’s commitment to broadening its global footprint and enhancing its market presence.
Baidu (BIDU)
Baidu (NASDAQ:BIDU), often dubbed the “Google of China,” has solidified its position in AI and internet services. The firm has invested heavily in AI technologies that power its autonomous driving, voice recognition, and cloud services.
Moreover, its sophisticated foundation model, ERNIE, is recognized as China’s most powerful AI model. Back in April, ERNIE surpassed the 200 million user mark, underscoring Baidu’s robust positioning in generative AI.
Additionally, in recent quarters, we’ve seen a healthy bump in non-online marketing revenue, driven mainly by its burgeoning AI cloud business. Given the firm’s investments in AI, I expect its cloud division to continue spearheading its operational results.
Furthermore, its aggressive share buyback strategy shows Baidu’s proactive approach to creating shareholder value. Since the beginning of Q1, the company has repurchased shares worth $229 million, bringing the total buyback amount to $898 million under its 2023 share repurchase program.
BYD (BYDDF)
BYD (OTCMKTS:BYDDF) is a Chinese EV juggernaut that has proven resilient despite the headwinds weighing down the EV space. Consequently, its stock has been laggard this year, losing north of 8%. However, its long-term bull case remains firmly intact, making it an excellent buy at current prices.
It turned heads last year during the fourth-quarter (Q4), when it sped ahead of Tesla (NASDAQ:TSLA) in total cars sold. This massive breakthrough underscores BYD’s dominance while setting the stage for healthy competition in the coming years.
Moreover, BYD isn’t just outpacing Tesla in deliveries; it’s surpassing it across multiple fronts. Take, for instance, BYD’s gross margins, which outshine Tesla’s, standing at 21% versus Tesla’s 18%. The gaps are much more pronounced with BYD’s EBITDA growth, which is 71% compared to Tesla’s -26%. These healthy profitability metrics are a testament to BYD’s robust internal economics and the impressive sales that have propelled it to the top of the EV heap.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.