Portfolio Manager Has The 'Most Conviction' In This China Tech Stock Despite Staggering Drop In Share Price

The ongoing struggles of China’s tech behemoths haven’t deterred Brian Arcese, an investment manager, from maintaining a bullish outlook on Chinese tech firm JD.com JD.

What Happened: During a conversation on CNBC Pro Talks, Arcese, a portfolio manager at Foord Asset Management, voiced his optimism about JD.com. Arcese highlighted the e-commerce, logistics, and marketing giant’s continued growth, and its 10% free cash flow yield.

Arcese noted that even after excluding cash and investments from the equation, the company presents an impressive 15% to 20% free cash flow five times. This, he emphasized, is for a business that dominates its sector and continues to expand. Despite holding shares in Alibaba, Baidu, and Tencent, Arcese revealed he has “the most conviction” in JD.com.

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Over the course of this year, JD.com’s shares have seen a 50% decline on both the Hong Kong exchange and the Nasdaq. Despite this, FactSet data indicates that 20 out of 23 analysts covering JD.com recommend a buy or overweight rating. This suggests a potential upside of around 48% from its closing price on Nov. 22. Similarly, 37 out of the 47 analysts following the Nasdaq-listed JD.com stock recommend a buy or overweight rating, projecting a potential upside of 54.4%.

Why It Matters: This vote of confidence in JD.com comes amid a challenging year for Chinese tech giants. Increased regulatory scrutiny and a slowdown in China’s economy have led to significant drops in share prices across the sector. Despite these challenges, JD.com’s robust growth and strong cash flows have made it an attractive investment opportunity for some, like Arcese.

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