New Trade for October 13th, 2020

Futures are mixed this morning.  The Dow and S&P are down, while the Nasdaq is green, adding to the winning streak of the past four days.  

JPMorgan Chase and Citigroup are both up this morning after reporting better than expected earnings.  Later today, Apple will release its latest line of iPhones including their 5G compatible models.  Also, today begins Amazon’s prime day, designed to stoke consumer spending ahead of Black Friday and the holidays.  

Investors who dream of traveling back in time to invest in AMZN, which is currently trading at roughly 89 times forward earnings, may want to consider an investment in this massive and ever growing retailer with a much more attractive valuation.  

Alibaba Group (BABA) has an Amazon-like ingrained foothold among China’s consumers, but it trades at 29 times forward earnings, a much better valuation compared to Amazon.  

To be sure, portfolio managers agree tensions between the U.S. and China won’t disappear, no matter who is in the White House in January.  But that’s not stopping them from investing in companies that are strong enough to defend against legitimate yet heated political rhetoric.

A rivalry between the U.S. and China may pose less of a threat to Alibaba than other companies because Alibaba is a very domestically focused business, and China has a very deep domestic market. 

Alibaba has an attractive valuation and strong ad growth in e-commerce yet is less levered to the economy than other retailers.  It’s also moving into supermarket services in China, which is huge.