Investors seeking exposure to the rapidly expanding ecommerce industry may consider cheaper stocks that are similar to Amazon. In China, 25% of retail spending has moved online. A statistic that is swiftly rising. This demand is being met by Alibaba and JD.com. JD.com is listed on the Nasdaq too, trading at a much more affordable $70, with a relatively reasonable trailing PE of 13.82. JD.com boasts breakneck delivery speeds and has only 30 days of inventory, comparable to Amazon’s 26.5. This pace of service is due to the company’s recent aggressive reinvestment, which has depressed its earnings and, therefore, its stock value.
The scale of JD.com’s delivery infrastructure across China has meant that the company is close to achieving the economies of scale that Amazon enjoys. In addition, JD.com is also China’s largest supermarket operator and biggest pharmacy – two industries that Amazon has been trying hard to penetrate. We believe JD.com’s stock has significant upside potential. Investors excited about the ecommerce industry but sceptical about Amazon’s lofty valuation may choose to invest in JD.com instead.
Sentiment for JD.com and Alibaba mirrors Amazon, as reflected in the Acuity Trading Dashboard. This is despite the fact that there is far more upside to JD.com and Alibaba than Amazon and much more downside to the ecommerce behemoth than to its China-based rivals.