JD Stock: Should You Buy The Dip? Michael Burry believes in JD's awesome potential —but uncertainty about tariffs put the stock at risk. Here's what you need to know.
This story originally appeared on WallStreetZen
Recent weeks have seen clear signals from the Trump administration that the White House is interested in pursuing trade negotiations with China.
This could resolve one of the biggest hurdles currently facing the equities markets. (Related reading: Stocks You Should Sell Right Now)
China, on the other hand, has been quite a bit more restrained, even reticent, when it comes to the matter — until now. Per a statement made on Friday, May 2, by a spokesperson for the country's Commerce Ministry, the world's second-largest economy is "evaluating" whether or not to engage in talks.
But let's face it — the present state of affairs benefits absolutely no one, and a significant detente appears more likely than ever. This, in turn, means that Chinese equities, which have understandably been hit pretty hard by the trade war in general, might be in for a pretty significant rebound.
Back in September of 2024, an ambitious share repurchase program, heaps of positive analyst coverage, and an extensive stimulus package aimed at the equities market in China brought JD.com stock (NASDAQ: JD) to a peak (not an all-time high, mind you) of $44.10.
Fun fact — JD is also a favorite of Michael Burry's, and is currently the 3rd largest holding in his portfolio.
Following Trump's election, the price of JD shares slid down to $34.49. But then it made a move to the upside that reached $44.
But that's in the past. Right now, JD stock is trading at roughly $34.46. Better yet? There has only been a 1.17% gain in the past week, despite the tailwind provided by the aforementioned trade talks.
In other words, there's still an opportunity here — now let's examine why it's worth taking.
JD shares currently have an overall Zen Rating of A, and rank in the top 3% of the more than 4,600 equities we track based on thorough analysis of 115 factors that correlate with above-average returns.
Moreover, at present, JD is also the 2nd highest-rated stock in the Internet Retail industry, which is quite highly rated on the whole.
Even though the stock has faced some serious challenges, Wall Street analysts haven't been deterred — JD remains a consensus Strong Buy, with an average price target of $49.22 — which implies a 49.84% upside from current prices.
However, for a better idea as to why it merits your consideration, we have to take a look at specifics — in this case, the stock's Component Grade ratings. JD shares rank highly in terms of Value, Growth, and Artificial Intelligence.
Let's go through the aforementioned ratings one by one. JD ranks in top 4% of stocks according to Value. The stock is currently trading at a steep discount, with its price-to-earnings (P/E) ratio sitting at just 8.68x. For the sake of reference, the industry average is 38.01x — and the wider market average is 29.2x.
Moreover, price relative to growth prospects also paints a picture of an undervalued stock, as its price-to-earnings growth (PEG) ratio is 0.91x. And since we're on the topic of Growth, that's another Component Grade rating where JD ranks highly — in the 97th percentile, to be exact.
With those growth prospects and a very low valuation combined, JD would be one of the stocks best-positioned to benefit from renewed inflows into Chinese equities.
Lastly, in terms of Artificial Intelligence, the stock ranks in the top 6% — meaning that a neural network trained on 2 decades of technical and fundamental data has identified it as a likely outperformer.
If that has piqued your interest, keep your ear to the ground on May 13 — as that's when the company will hold its next earnings call.
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