China is the world’s No. 2 economy and home to dozens of companies that trade in the U.S. Right now, JD.com (JD), Pinduoduo (PDD), Canadian Solar (CSIQ), BYD (BYDDF) and Trip.com (TCOM) are China stocks worth watching or potentially buying.
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It’s been a tough couple of years for Chinese stocks. The Covid pandemic, and Beijing’s zero-Covid policy, have slammed the economy. Meanwhile, regulatory crackdowns vs. technology and data-centric firms such as Alibaba (BABA), Tencent (TCEHY) and NetEase (NTES) have been a major headwind. U.S. trade tensions are a concern, with the White House barring shipments of key chip technology to China, along with tariffs and other curbs on Chinese goods.
However, the tech crackdown seems to have eased, while China is rolling back severe Covid restrictions. It’ll scrap its Covid quarantine rules for inbound travelers on Jan. 8.
With an end to lockdowns and other severe steps, a massive wave or waves of infections is underway.
But for now, Chinese stocks are rebounding. Along with price gains, volume has picked up, providing further evidence of a change of character. Along with China-specific bullishness, there’s a confirmed stock market rally that’s been ongoing for the past several weeks. However, the uptrend is under heavy pressure.
While the current top China stocks to buy or watch are dominated by e-commerce plays, don’t forget EV startups such as Nio (NIO) and Li Auto (LI). Like global giant BYD (BYDDF), all are taking on Tesla (TSLA) in the world’s largest EV market.
Tencent, NetEase and Baidu (BIDU) are other internet giants to follow.
Top Chinese Stocks To Buy Or Watch
| Company | Ticker | Industry Group | Composite Rating |
|---|---|---|---|
| JD.com | JD | Retail-Internet | 80 |
| BYD | BYDDF | Auto Manufacturers | N.A. |
| Canadian Solar | CSIQ | Energy-Solar | 78 |
| Trip.com | TCOM | Leisure-Travel Booking | 79 |
| Pinduoduo | PDD | Retail-Internet | 99 |
JD.com Stock
JD.com is China’s No. 2 e-commerce firm, behind only Alibaba.
It’s been consistently profitable for years, with annual growth since 2018. Earnings growth has accelerated for the past two quarters, soaring 80% in Q3. But revenue growth has slowed for six straight quarters, to just 1%, amid Covid shutdowns and related disruptions.
A crackdown on big internet platforms, though falling harder on Alibaba and Tencent, still weighed on JD.com stock.
JD.com stock peaked at 108.29 in February 2021, tumbling to a Covid low of 33.17 on Oct. 24, 2022. Since then shares have run higher, clearing the 50-day in early November, and it’s back above its 200-day line for the first time in almost a year. Shares are now consolidating at that key long-term average. But there’s no clear buy point. Investors might use 61.50, just above recent highs, as an aggressive entry.
Bottom line: JD.com stock is not a buy.
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BYD Stock
BYD is easily the world’s largest EV maker, including fully electric battery electric vehicles (BEV) and high-mileage plug-in hybrids (PHEV). It still trails Tesla in global BEV sales, but is rapidly closing the gap.
BYD is China’s biggest BEV maker. As of November, it’s China’s largest automaker period.
BYD sold 230,427 vehicles in November, up 153% vs. a year earlier and 5.8% vs. October. Of the 229,942 personal vehicles, some 113,915 were BEVs up 147% vs. November 2021. PHEVs shot up 164% to 116,027.
BYD is on track to sell 1.88 new energy vehicles in 2022, the company said Dec. 22. That’s slightly less than the company had hoped just a few weeks ago, but a massive China Covid wave is taking a toll on production in late December. Even so, the revised forecasts suggest December sales will hit yet another record high.
The company is targeting four million NEV sales in 2023.
BYD earnings growth is surging, as massive, ongoing investments in EV and battery plants pays off. Q3 net income shot up 350% in local currency terms, with adjusted profit skyrocketing 923%. Revenue leapt 116%.
The EV giant is moving up the price scale from moderate priced vehicles. The BYD Seal has very similar specs to a Tesla Model 3, but starts at roughly $8,000 cheaper.
Its 90% Denza unit just launched its D9 minivan starting around $50,000. The Denza unit, 10% owned by Mercedes, will launch an SUV in early 2023.
BYD will launch a super-premium brand in early 2023, along with another, personalized brand.
BYD is in the midst of a massive global expansion, recently beginning sales in Australia, Singapore, New Zealand and several European countries. It’s about to start deliveries in Thailand, with Japan, India, Mexico and Malaysia among new markets in early 2023.
It’s building a factory in Thailand and will do so in Brazil.
BYD makes its own chips and batteries, which helped limit supply chain issues in recent years. It supplies batteries for third-party EVs, including Ford Motor (F), Toyota (TM) and Tesla.
It’s also a big player in battery storage for home or utility-scale projects. That business may ramp up further as battery production increases beyond BYD’s own EV needs.
BYD stock hit a bear-market low of 21.29 on Nov. 25, in part due to China’s lockdowns. But as curbs have eased, BYDDF rebounded, moving above its 50-day line in early December. Shares have fallen back below that key level. It has substantial distance to reach its 200-day line.
BYD is listed in Hong Kong and Shenzhen and trades over the counter in the U.S., so BYDDF can be prone to mini-gaps.
Bottom line: BYD stock is not a buy.
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Canadian Solar Stock
While technically based in Ontario, Canada, Canadian Solar is largely a Chinese company. It makes and installs solar modules as well as developing and building solar power plants.
Canadian Solar’s earnings per share fell in 2019, 2020 and 2021, but are expected to more than double in 2022, with a 68% gain in 2023. EPS rose 494% and 167% in the latest two quarters.
CSIQ stock hit a 52-week high 47.69 on Aug. 18, but then tumbled to 27.38 on Oct. 24. Shares rebounded, fell back, but are now back below their 50-day and 200-day lines and moving toward their October lows.
Bottom line: CSIQ stock is not a buy.
Pinduoduo Stock
Pinduoduo is the No. 3 e-commerce player in China, after Alibaba and JD.com. But it’s outperformed its larger rivals in recent months, with its bargain focus appealing to consumers in a tough economy.
Sales growth has accelerated for the past three quarters, from 5% to 50%. Pinduoduo earnings spiked 256% in Q3, reported on Nov. 28.
PDD stock peaked at 212.60 in February 2021 then crashed to 23.21 on March 15, 2022. But since then, Pinduoduo stock has trended higher, in a volatile fashion.
PDD stock gapped out of a 47%-deep base on Nov. 28 following earnings, spiking 31% for the week to a 52-week high. Shares kept running higher before pulling back modestly toward their 21-day line.
Bottom line: PDD stock is not a buy.
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Trip.com Stock
Trip.com is a China-based online travel firm, operating under several brands and in many countries. China is easing travel quarantine rules with signs of broader Covid policy changes seen as a boon for China travel.
Trip.com has a profitable history, though it reported losses in Q1 and Q2, with Q2 revenue down 34% vs. a year earlier.
Trip.com reported Q3 profit up 69% on Dec. 14. Revenue grew 16.5%, the best gain in five quarters.
Profits are seen surging in 2023.
TCOM stock hit a nine-year low of 14.29 in March. Since then Trip.com stock has rebounded. A late August breakout attempt failed, with shares retreating to 19.25. But then it rebounded in volatile fashion, with a number of high-volume gains. TCOM shares rebounded from the 50-day line on Nov. 28 and have kept running, finally clearing resistance around 30-31 on Nov. 30.
Shares are extended now, holding near 52-week highs.
Bottom line: TCOM stock is not a buy.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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