Buy Tencent Stock
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Picking individuals stocks is a lot like playing the lottery. The top best performing 4% of stocks accounted for the entire wealth creation of the US stock market since 1926, which means there were lots and lots of losing stock pickers. Are you sure TCEHY is going to continue its mind-blowing trajectory for the long haul
If your money is burning a hole in your pocket and you need your TCEHY right now, choose this type. If stock markets are open, it will execute the trade immediately, or just as soon as the market opens next. The price you will pay will be right around the latest traded price for the stock, give or take a few cents per share.
Those growth rates seem anemic, but Tencent's stock had already been cut in half over the past two years amid concerns about China's tightening regulations, slowing economic growth, and COVID-19 lockdowns. So is it the right time to take the contrarian view and buy Tencent as a turnaround play Let's review its core businesses and valuations to decide.
Tencent is barely growing, yet its stock still trades at 20 times next year's earnings. Therefore, I can't consider it a value play -- or an attractive investment at all -- when so many other high-growth stocks are still on sale.
In another move, this past summer, Prosus and Naspers engaged in a share swap, in which Prosus would essentially buy 49% of Naspers' "cheaper" stock with its own more "expensive" stock, in an effort to further boost Prosus' liquidity and further lower Naspers' weight on the JSE.
So when you think about it, Prosus essentially owns $103.5 billion in assets outside of Tencent's main business and subsidiaries. And remember, that was as of September 30. Given the bounce in several Chinese and technology stocks since then, that number is likely higher today.
Last month, Chinese stocks got a fresh lease of life, witnessing their biggest rally in the last two decades. A volley of positive news buoyed most Chinese stocks. Talks between U.S. President Joe Biden and Chinese President Xi Jinping have given signs of easing tension between the two nations. With that, the ever-growing concern of the delisting of Chinese stocks from the U.S. stock markets is also put to rest.
At the same time, China is becoming more lenient on its travel restrictions and its zero-COVID policy to help revive the ailing economy and return to normalcy. The much-awaited reopening of the Chinese economy and the final exit from its zero-Covid policy bodes well for all the Chinese stocks listed overseas.
While Tencent stock has taken a massive hit in recent years due to numerous issues, I continue to like the stock for various reasons. Tencent has a big competitive advantage in the gaming industry as it is vertically integrated. Its gaming operations span across the value chain with game development, game publishing, and game distribution verticals.
As per TipRanks, Tencent Holdings stock has received one rating over the past three months. Barclays analyst Jiong Shao assigns a Hold rating on Tencent Holdings with a price target of $36 (10.6% downside potential).
Like most Chinese stocks, Tencent Holdings has been out of favor due to many reasons like strict government regulations for the Chinese technology sector, the crackdown on monopolistic practices, and the possible delisting from the U.S., to name a few.
There are clear signs of a revival for Tencent as well as the Chinese economy in 2023. The stock could show a sharp recovery and reach or perhaps even cross its historical highs. I am bullish on TCEHY and will buy at current levels.
Valuing Tencent Holdings Ltd ADR stock is incredibly difficult, and any metric has to be viewed as part of a bigger picture of Tencent Holdings Ltd ADR's overall performance. However, analysts commonly use some key metrics to help gauge the value of a stock.
Recently Tencent Holdings Ltd ADR has paid out, on average, around 36.86% of net profits as dividends. That has enabled analysts to estimate a "forward annual dividend yield" of 0.47% of the current stock value. This means that over a year, based on recent payouts (which are sadly no guarantee of future payouts), Tencent Holdings Ltd ADR shareholders could enjoy a 0.47% return on their shares, in the form of dividend payments. In Tencent Holdings Ltd ADR's case, that would currently equate to about $1.303 per share.
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Mainland mutual fund families are asking investors for cash to buy stocks due to attractive valuations. Mainland fund flows have been dominated by money market funds and bond funds as active and passive equity inflows have stalled.
The Hang Seng Index and Hang Seng Tech Index fell -1.84% and -3.22%, respectively, on volume that was +21.94% higher than Friday, which is 103% of the 1-year average. Decliners beat advancers by 3 to 1 as short sale volume jumped +13.72% from Friday, which is 130% of the 1-year average. Value and dividend factors outperformed as consumer staples was the only positive sector, gaining +1.33%. On the downside, consumer discretionary fell -4.47% followed by energy and materials, which fell -3.27% and -3.01%, respectively, as mining and metal stocks were hit hard. Hong Kong-listed internet stocks led the most heavily traded by value as Tencent fell -2.29%, Meituan fell -3.31%, JD.com HK fell -8.21%, Alibaba HK fell -4.81%, and BYD fell -5.95%. Southbound Stock Connect reopened as Mainland investors bought Tencent and Meituan in size.
Shanghai, Shenzhen, and the STAR Board gained +1.06%, +1.53%, and +2.68%, respectively, on volume that was +26.57% higher than yesterday, which is 78% of the 1-year average. There were 3,317 advancing stocks and 993 declining stocks. Growth factors outperformed value and dividend factors along with small caps outperforming. The tech sector gained +2.4% led by semiconductors, utilities gained +2.35% led by solar and wind names, and industrials gained +2.14%. Meanwhile, energy was the only down sector, falling -3.3% led lower by coal names. Northbound Stock Connect reopened as foreign investors sold -$1.3 billion worth of Mainland stocks today. Treasury bonds rallied, CNY was off -0.09% versus the US dollar, and copper was off -0.43%.
I am the VP for American Association of Individual Investors & AAII Journal Editor. I am also the author of Better Good than Lucky: How Savvy Investors Create Fortune with the Risk-Reward Ratio (published by W&A Publishing/Trader's Press). I write about stocks, ETFs, investing and provides insight about individual investor sentiment as well as market and economic analysis.
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Shares of Chinese internet giant Tencent Holdings Limited (OTCPK:TCEHY) (OTCPK:TCTZF) are down roughly 19% off of their highs since the stock peaked in mid-February. In this article, we'll explain why we think this is currently a great buying opportunity.
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Tencent stock surged nearly 40% in November, following the clarification from its major shareholder. An announcement of Tencent distributing shares of food delivery company Meituan to its shareholders also propped the price.
Legendary value investor Mohnish Pabrai (Trades, Portfolio) has sold 77% of his Alibaba (BABA, Financial) stock after previously being extremely bullish on the name, both publicly in interviews and with his buying power.
Pabrai started buying shares of the Chinese e-commerce giant back in 2021, at an average buy price of between $222 and $245. As a long-term value investor (inspired by Warren Buffett (Trades, Portfolio)), it is very strange to see him sell a stock just a few months after initiating a position.
The stock has declined approximately 32% from Pabrai's average buy point due to regulatory headwinds. However, as a deep value investor, that is no reason to sell in and of itself; if anything, it would be a reason to buy more shares. As Buffett says, "Be greedy when others are fearful."
Personally, I think these issues were a contributing factor, but not the only factor in Pabrai's decision to sell Alibaba. Here is why: many of these issues such as Ant Financial's IPO being suspended occurred in 2020, prior to Pabrai buying the stock. He was well aware of these issues, and as a value investor, likely saw the volatility as an opportunity to buy the stock at a discount.
The anticipated breakout should be taken with a grain of salt, though. According to the Elliott Wave theory, a three-wave correction follows every impulse. If this count is correct, a notable bearish reversal can be expected to form in Tencent stock soon. Then, a decline back to the support area near HKD 300 would make sense before the uptrend can resume. Investors better wait for this drop and not succumb to the fear of missing out. 59ce067264