Hundreds of Chinese companies are listed on U.S. markets. But which are the best Chinese stocks to buy or watch right now? JD.com (JD), NetEase (NTES), Li Auto (LI), Xpeng (XPEV) and BYD Co. (BYDDF).
China is the world’s most-populous nation and the second-largest economy, with a booming urban middle class and amazing entrepreneurial activity. Dozens of Chinese stocks are often among the top performers at any given time, across an array of sectors.
Regulatory Hopes
China’s Politburo released statements on April 29 suggesting that a broad crackdown on internet platforms will finally be easing.
However, Beijing has made signals over the past year that a tech crackdown was ending, only to renew strict measures and penalties.
Meanwhile, U.S. and Chinese regulators are meeting to discuss how on-site audit inspections would work, Bloomberg reported, the latest step toward ending delisting fears.
However, China’s ongoing Covid shutdowns, notably in Shanghai, are taking a massive toll on production, supply chains and spending.
Best Chinese Stocks Across Many Industries
As the world’s largest internet market, it’s no surprise to see big growth from China stocks focusing on e-commerce, messaging or mobile gaming. Notable Chinese internet stocks include:
In electric vehicles, several Chinese companies are becoming serious rivals to Tesla (TSLA) in the world’s biggest auto market.
Several Chinese financial firms or brokerages are listed in the U.S.
- Futu Holdings (FUTU)
- Up Fintech Holding (TIGR)
- 360 DigiTech (QFIN)
- Noah Holdings (NOAH)
Several China stocks are in solar power.
- Daqo New Energy (DQ)
- JinkoSolar (JKS)
For-profit education Chinese stocks are a notable nontech sector.
- New Oriental Education (EDU)
- TAL Education (TAL)
- 17 Education & Technology Group (YQ)
- Gaotu Techedu (GOTU), formerly known as GSX Techedu.
Don’t forget stocks in other fields, such as riding-hailing outfit Didi Global (DIDI), beauty products maker Yatsen (YSG) or data-center operator GDS Holdings (GDS).
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China Stock Investing Via ETFs
One way to minimize individual China stock risks is via ETFs. Another advantage of buying ETFs is that a growing number of Chinese companies are listing in Hong Kong or Shanghai, instead of or in addition to the U.S.
KraneShares CSI China Internet ETF (KWEB) tracks major Chinese internet companies. Many Chinese stock holdings in the KWEB ETF are U.S. listed or traded, such as Alibaba stock, JD.com, Tencent, Pinduoduo and Bilibili, but KWEB also holds companies listed on Chinese markets. Direxion Daily FTSE China Bull (YINN) is a three-times-leveraged ETF of the 50 largest companies listed in Hong Kong, including Alibaba, JD.com and Tencent stock, but its biggest weights are in financials. (The Direxion Daily FTSE China Bear (YANN) is a three-times-leveraged ETF shorting Hong Kong’s biggest companies.)
Stock Market Trend Key
As always, investors should be following the overall stock market trend, adding exposure in confirmed uptrends and paring exposure or going fully to cash in corrections or bear markets. Right now the stock market is in a correction, with the Nasdaq in a bear market.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live.
Best China Stocks To Buy: Key Ingredients
Focus on the best stocks to buy and watch, not just any Chinese company.
IBD’s CAN SLIM Investing System has a proven track record of significantly outperforming the S&P 500. Outdoing this industry benchmark is key to generating exceptional returns over the long term.
Look for companies that have new, game-changing products and services. Invest in stocks with recent quarterly and annual earnings growth of at least 25%.
Start with companies with strong earnings growth, such as Pinduoduo. If they’re not profitable, at least look for rapid revenue growth as with Xpeng. The best China stocks should have strong technicals, including superior price performance over time. But we’ll be highlighting stocks that are near proper buy points from bullish bases or rebounds from key levels.
Chinese stocks in general are out of favor now.
Why This IBD Tool Simplifies The Search For Top Stocks
Best Chinese Stocks To Buy Or Watch
| Company | Ticker | Industry Group | Composite Rating |
|---|---|---|---|
| Li Auto | LI | Auto Manufacturers | 61 |
| NetEase | NTES | Computer-Software Gaming | 86 |
| BYD | BYDDF | Auto Manufacturers | n.a. |
| JD.com | JD | Retail-Internet | 60 |
| Xpeng | XPEV | Auto Manufacturers | 24 |
So let’s analyze these five top China stocks: Li Auto stock, NetEase stock, BYD stock, Xpeng stock and JD.com stock.
Li Auto Stock
Li Auto is one of several Chinese electric-vehicle makers that trade in the U.S., competing with each other and Tesla (TSLA).
The company is flirting with being profitable consistently, at least on an adjusted basis. On Feb. 25, Li Auto reported Q4 earnings of 2 cents a share, flat vs. a year earlier and beating views for a small loss. Revenue also topped views.
Li Auto has seen huge sales growth from its one current model, the Li One SUV. The Li One is actually a hybrid, with a small gasoline engine to extend its range. Later this year, Li Auto will introduce a larger hybrid SUV, the L9.
Li Auto on April 20 warned of notable production impacts in April, apologizing for delivery delays, amid Covid shutdowns.
On May 1, Li Auto reported it delivered 4,167 Li One hybrid SUVs, down 62% vs. March’s 11,034 and 25% below a year earlier. Many suppliers are shut down, severely affecting Li’s production.
Shares sold off hard in March to their lowest levels since last May. Li stock rebounded in late March but then tumbled back below its 50-day line.
Shares edged lower on May 2.
The automaker has a dual listing on the Hong Kong exchange.
Li stock has a 61 IBD Composite Rating out of a best-possible 99.
Bottom line: Li Auto stock is not a buy.
NetEase Stock
NetEase is a Chinese mobile gaming giant.
It’s profitable, but growth has been spotty in recent quarters amid a Chinese government crackdown on video games. NetEase earnings surged 333% in the fourth quarter vs. a year earlier, with revenue growth picking up to 27%.
NetEase stock, like many other Chinese internets, has struggled over the past year. NTES stock peaked at 134.33 in February 2021 but tumbled to 77.79 last August. Shares rallied to 118.19 on Nov. 22, right as the Nasdaq peaked, then dropped back below its 50-day and 200-day lines.
Shares hit a 22-month low on March 14, but since then have rebounded. NTES stock is just above its 50-day line.
Shares gapped up above the 200-day line on April 29 on hopes for an end to internet crackdowns, but closed just below that key level. That’s after reclaiming the 50-day line on April 28.
Bottom line: NTES stock is not a buy.
BYD Stock
BYD is the biggest pure-play Chinese EV maker; it makes electric cars and buses and many hybrids. It’s also a major EV battery maker. Warren Buffett’s Berkshire Hathaway (BRKB) is a longtime investor.
Notably, BYD is profitable, in sharp contrast to Li Auto, Nio and Xpeng Motors, though capital spending surged in 2021 to power the company’s ongoing expansion.
BYD reported first-quarter net income jumped 241% in local currency terms vs. a year earlier. That was in line with a recent forecast for 174%-300% growth. Revenue rose 63% in local currency terms.
The auto giant will likely report April sales around May 3, amid indications that its production and deliveries held up relatively well in April despite lockdowns in much of the country.
BYD’s March new energy vehicle sales of 104,878 units, up 333% vs. a year earlier. That’s up from 88,283 NEV sales in February, with the China New Year affecting results. BYD sold 93,168 NEVs in January, when a 30% subsidy cut in China affected a lot of EV makers.
The March total includes 104,338 passenger cars. Of that, BYD sold 53,664 pure electric vehicles, up 229% from a year earlier. Plug-in hybrid sales skyrocketed 615% to 50,674. Hybrid sales have surged thanks to a new, fuel-efficient DM-i system that provides substantial battery range.
As of the end of March, BYD has ended production of its traditional gas-powered cars. Sales had dwindled to 2,759 vehicles in February.
The automaker is now conservatively targeting 1.5 million in sales, or up to two million if supply constraints ease.
BYD launched the Yuan Plus in China on Feb. 19. The compact SUV also has begun presales in Australia as the Atto 3. The Yuan Plus also will enter the Singapore market. Exports are likely to be a big part of BYD’s future, as production continues to ramp up sharply.
Among BYD’s upcoming models is the Seal sedan. The Seal will be a Model 3 rival, with longer range but significantly cheaper. Unlike many Tesla rivals, when BYD launches a new model, it quickly produces in volume.
BYD on April 10 officially launched more-advanced hybrid versions of its BYD Han, with an electric-only range of up to 150 miles on a China standard. The flagship BYD Han already comes in all-electric and an older hybrid form. The all-electric Han also got a substantial upgrade, including a big increase in range. BYD said on April 10 that it received more than 48,000 order for the updated Han EV and hybrid models, which have been available for preorder since March 19.
Like Nio and Xpeng, BYD began selling EVs in Norway in late 2021, starting with the Tang SUV.
Toyota reportedly will make a small EV car for the China market in late 2022, using BYD Blade batteries. It’s possible that BYD will play a big role in Toyota’s new, sweeping EV push in the coming years. Also, BYD is starting to license its DM-i hybrid system to other EV makers.
BYD stock plunged to a nine-month low on March 14 but has rebounded powerfully. Shares jumped on April 4 back above the 50-day.
The EV and battery giant said on April 22 that it would buy back about $280 million worth of its class A shares in Hong Kong. BYD stock is rebounding from its 50-day line.
Shares hit a record 41.24 in early November.
BYD is listed in Hong Kong and trades over the counter in the U.S. So the BYDDF stock chart is prone to lots of little gaps up and down.
Warren Buffett’s Berkshire Hathaway is a longtime investor in BYD. Cathie Wood has been increasing Ark Invest’s small stake in recent weeks.
Bottom line: BYD stock is not a buy.
Tesla Vs. BYD: Tesla Rival About To Seize EV Crown
Xpeng Stock
Xpeng makes the G3 small SUV, the P7 sedan and the smaller P5 sedan. On Nov. 12, Xpeng unveiled the G9 SUV, saying it’s targeted for international markets. The fast-charging SUV is due to launch in Q3 2022.
The EV maker has now opened P5 reservations in Norway, Denmark, Sweden and the Netherlands. Xpeng already sells some G3 SUVs and P7 sedans in Norway.
On May 1, Xpeng reported April deliveries of 9,002 vehicles, down 42% vs. 15,414 in March, as Covid shutdowns affected suppliers, hampering deliveries. But deliveries did rise 75% vs. a year earlier.
Shares in March skidded to their worst levels since late 2020, not far from all-time lows. XPEV stock surged in mid-March, but then faded again.
Shares fell modestly on May 2.
Bottom line: Xpeng stock is not a buy.
JD.com Stock
JD.com is a Chinese e-commerce giant. It’s showing a bit more fight than rivals such as Alibaba.
The company reported better-than-expected fourth-quarter earnings on March 10, while revenue was in line.
JD.com stock peaked at 108.29 on Feb. 17, 2021, and bottomed at 61.65 on July 25. Shares hit a multimonth high in November, but then tumbled until early January.
In March, JD.com stock fell to its worst levels since May 2020. JD stock surged in late March but have fallen back again.
JD.com founder Richard Liu on April 7 stepped down as CEO. He remains chairman.
The company said on April 22 that it’s considering a special dividend on or around May 4. Shares rose modestly.
Shares jumped above their 50-day line on April 29 on hopes for an end to internet crackdowns.
Bottom line: JD.com is not a buy.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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