There is a widening gap of outperformance by technology companies. This is particularly true for technology companies with exposure to strong secular growth trends such as e-commerce. This trend has created a perfect storm of late for investors that have stuck with such investments through the volatility this coronavirus pandemic as provided. In this article, I’m going to discuss my take on the outlook for Chinese technology mega-giant Alibaba Inc. (NASDAQ:BABA) for Canadian investors in this context.
The global race for market share in the e-commerce space has produced incredibly large and increasingly profitable players both in North America and abroad. Alibaba is often less discussed than its peers, with American giant Amazon.com, Inc. (NASDAQ:AMZN) absorbing most of the discussion domestically. That said, Alibaba is a great option for those interested in big tech stocks tied to e-commerce. This company is a fundamentally better pick in a number of ways, including specific metrics such as valuation multiples and bottom line performance in recent years.
Global stocks tend to trade at a discount to North American traded stocks, for a variety of reasons. Many Canadian and American investors may not be as attuned to the business model of Alibaba, and others may simply be more enticed to invest close to home. That said I’d encourage all investors, particularly those with the need for global diversification, to consider Alibaba as a tech holding in the blue chip large cap space from a value perspective alone.
Invest wisely, my friends.