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Is a buy?

E-commerce around the world has been exploding at an exponential rate. Here is the breakdown on an unpopular e-commerce name known as otherwise known as $JD.

Current Price: $80.06

52/Wk High: $81.45

52/Wk Low: $27.47

Read below for the breakdown!

$JD is a Chinese e-commerce platform and holding company. The company has multiple booming lines of business including online retail, online market places, and logistic services.

What separates $JD from most of its e-commerce competition is the fact that the company’s shipping and logistics is all in house, allowing the company to perform on lower margins and offer their services to other companies.

Not only is $JD more efficient than most e-commerce companies but they’re investments are geared toward the future. $JD’s business model is more similar to $AMZN and the companies growth has so far been terrific.

JD has made major investments in autonomous shipping solutions (Autonomous cars and drones) all the while making investments in other sectors such as digital healthcare and cloud businesses.

These past investments are helping $JD outperform the competition now, very similar to the early years of Amazon in which the stock stayed flat but major investments were being made.

Digging into the numbers when last reported $JD has 417 million active users and pushed a gross merchandise volume of $300 billion in 2019 according to Motley Fool. Furthermore, these great numbers are creating positive fundamentals and fabulous growth.

$JD produced a massive Q2 beat with a huge EPS and revenue beat. The EPS or in this case CNY per share was $3.51 versus the expected $2.66 representing a beat of 31.76% through EPS alone.

Not only that but revenue was strong, coming in at CNY $201 billion which according to past earnings reports is the company's highest revenue to date.

When analyzing the balance sheet the numbers look fine but not perfect. The company has an unfortunate total debt of CNY $10.052 billion. On the bright side, the company has created a solid cash on hand position of $17.841 billion as of June 30.

$JD did not release guidance for the third quarter but analysts are expecting more growth on the top and bottom. According to analysts expect revenues to grow 25% to 46% throughout 2020.

When it comes to analysts the so-called experts are relatively bullish. Currently, the average price target is just $80.38/share representing a slim .83% upside.

On another note, the high price target is $140.00/share representing a 75.63% gain and the low is $64.00/share representing a -19.72% loss. I believe that these price targets are due for an update given the rapid growth.

The big money is also somewhat flat on $JD with only 49.28% of the stock currently being held by institutions. Top holders including BlackRock Institutional Trust, D1 Capital Partners, and Fidelity Management & Research Company.

Finally digging into the technicals the stock has run far after a massive boost from the blowout Q2 earnings report. The stock currently sits at a 6-month RSI of 77.64 which is very unattractive when it comes to opening a position.

Furthermore, the 6-month MACD sits at 3.30 but still has strong upward momentum. Secondly, the 6-month CCI is still at a high 113.29. On the other hand, the stock has been flat in the past few days and is still in a strong upward trend.

In short, with all the growth starting to come the companies way, and expected growth to be high for years to come, I believe $JD is a solid investment long term and short term.

While the stock is trading high I think it has more room to run and if a position is taken I recommend a close stop in the case of a more major pullback.


Disclaimer: This is not direct financial advice, simply opinion based on independent research. Luke Donay currently holds long term call options on $JD.

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