3 China Stocks to Buy on the Dip: July 2024

Core Viewpoint - The Chinese market presents unique challenges and opportunities for investors, with significant government control and potential for high returns despite recent underperformance [1] Group 1: Economic Context - China's economy grew by 5.3% in the first quarter, indicating a recovery after a period of underperformance [1] - Companies that have underperformed are expected to return to analyst expectations as the market rebounds [1] Group 2: Alibaba (BABA) - Alibaba, a major e-commerce player in China, has seen its stock decline over 55% in the past five years, suggesting a potential buying opportunity [2] - The company reported a revenue growth of 6.6% year-over-year last quarter, but earnings fell by nearly 86%, indicating internal challenges [2] - Analysts project an average growth rate of 40.2% for Alibaba in the next year, highlighting its growth potential despite current issues [2][3] Group 3: Yum China (YUMC) - Yum China operates various restaurant brands in China and has seen its stock decline by 20% over the past six months, yet investor confidence remains strong [5] - The stock is currently trading at $29 with a market cap of $11.52 billion, and analysts predict a price target of $51.19, indicating a potential upside of 71% [5] - The company has a profit margin of 7.49% and an operating margin of 12.68%, showcasing its profitability [5] Group 4: Tencent Holdings (TCEHY) - Tencent is a leading Chinese conglomerate with a market cap of $437.9 billion, currently trading around $47 per share [6] - The stock has fallen over 4% in the past month but has consistently beaten EPS predictions with an average surprise of 11.6% [6] - Tencent's recent success with the game Dungeon & Fighter Mobile generated $270 million in revenue since its launch, contributing to a quarterly revenue growth of over 62% year-over-year [7]