Want Some Exposure To China's Growth? Stifel Says Buy JD Or Alibaba

China is without any doubt the largest eCommerce market in the world with the two biggest players being Alibaba Group Holding Ltd BABA and JD.Com Inc(ADR) JD.

The Analyst

Stifel's Scott Devitt resumed coverage of JD's stock with a Buy rating and $48 price target and reaffirmed Alibaba's stock with a Buy rating with an unchanged $210 price target.

The Thesis

The Chinese eCommerce market is expected to exceed $1 trillion worth of sales by 2019, which bodes well for the two largest players, Alibaba and JD.com, Devitt said in a note. Both companies are "well-managed and well-positioned leaders" and managed to effectively Amazon.com, Inc. AMZN from flexing its muscles in China.

Among the two giants, JD is more structured with a controlled logistics and a business model that shifted from first-party towards a hybrid first-party/third party model, the analyst said. This should help the company triple its market share from 6 percent in 2013 to 18 percent by the end of 2017. Moreover, third-party sales should exceed 50 percent of the company's total gross merchandise volume in the next few years that would generate a boost in operating margin.

"We have taken a stance within our coverage of favoring global eCommerce stocks over U.S. online media stocks due to various factors, including the recent focus on media's possible negative impact on society," Devitt said. "We expect JD to continue to gain share of the retail market it serves for years to come, generating excess stock returns."

Price Action

Shares of JD were trading higher by nearly 5 percent at $40.65 Wednesday afternoon. Shares of Alibaba were trading higher by 1.7 percent at $176.43.

Related Links

Morgan Stanley: JD.Com May Be Worth Waiting On

Alibaba Is Setting Aside $15 Billion For R&D Spend Across The World

Posted In: ChinaChina eCommerceecommerceScott DevittStifelAnalyst ColorTop StoriesAnalyst Ratings

Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on Bankrate.com. The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.

All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the Bankrate.com rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.

Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.

Rate collection and criteria: Click here for more information on rate collection and criteria.