Stocks to buy

With geopolitical tensions soaring between the world’s top two economies, the idea of targeting China’s publicly traded securities – even those billed as the best Chinese stocks to buy now – might seem risky. To be sure, there are plenty of reasons to doubt the sector.

For one thing, CNN Business points out that the recovery in the biggest economy of Asia has been patchy. Combined with the West and East pointing in dramatically different directions on key issues such as holding Russia accountable for its actions in Ukraine, the frameworks present huge obstacles for even undervalued Chinese stocks.

Still, investors may appreciate the words of Michael Kelly, global head of multi-asset at PineBridge Investments. “The more cracks appear in Western economies,” the likelier it is that global investors will need to put money into Chinese assets, remarked Kelly. In particular, Chinese tech stocks seem especially enticing for intrepid market participants. Of course, you’ll need to be patient and have an iron will. If that’s you, these Chinese growth stocks might do the trick.

JD JD.com $35.99
DAO Youdao $4.95
LIZI Lizhi $0.70

JD.com (JD)

Source: Vova Shevchuk / Shutterstock.com

An exciting opportunity among the best Chinese stocks to buy now, e-commerce giant JD.com (NASDAQ:JD) will require a strong constitution. Since the beginning of this year, JD gave up over 39% of its market value. In the past 365 days, it’s down nearly 33%. Nevertheless, if China’s consumer economy gradually recovers in a more convincing fashion, JD could swing back up again.

Certainly, many contrarians are probably eyeballing JD now that it printed so much red ink. Based on information from investment resource Gurufocus, the company’s three-year revenue growth rate pings at a very impressive 19.4%. Even with that performance, JD trades hands for 0.37 times trailing sales. In contrast, the sector median stat comes in at a loftier 0.66 times.

Also, it’s worth pointing out that JD ranks among the relatively few Chinese dividend stocks. Per TipRanks, it features a yield of 1.59%. That’s not going to make you rich per se. But if you’re looking for growth and passive income, JD might be interesting. Finally, analysts peg shares as a strong buy. Their average price target lands at $62.18, implying over 77% upside potential.

Youdao (DAO)

Source: Epic Cure / Shutterstock

A popular search engine, Youdao (NYSE:DAO) symbolizes the dramatic transformation that China took to become a global power. Unfortunately for shareholders of DAO, the supposedly bullish narrative got lost in translation. Since the start of this year, the stock tumbled more than 11%. In the past 365 days, it gyrated wildly, eventually leading to a loss of roughly 10%. Since its 2019 public market debut, shares gave up more than 59% of their equity value.

For risk-takers that want to swing for the fences, there’s an outside chance that DAO could be one of the best Chinese stocks to buy now. Basically, it centers exclusively on growth potential. Per Gurufocus, Youdao’s three-year revenue growth rate pings at an extremely impressive 47.7%. This stat ranks better than 96% of the competition.

Unfortunately, the other metrics like net margin or fiscal stability rate are very poor. That said, DAO trades hands at 0.85 times sales, below the industry median of 1.58 times. Therefore, it’s one of the undervalued Chinese stocks. Enticingly, analysts peg DAO as a unanimous strong buy. Their average price target comes out to $9.77, implying 92% upside potential.

Lizhi (LIZI)

Source: shutterstock.com/CC7

An extremely risky enterprise among Chinese growth stocks, Lizhi (NASDAQ:LIZI) created a comprehensive audio-based social ecosystem with a global presence, according to its website. Against a cherry-picked framework, LIZI doesn’t look too bad. Since the January opener, LIZI gained almost 15% of its equity value. However, you look at its sub-dollar price tag and a market capitalization of less than $28 million and you realize its inherent dangers.

In the past one-year period, LIZI tanked 46%. And since its public market debut in early 2020, shares hemorrhaged over 94%. Still, if you’re looking for the best Chinese stocks to buy now for extreme upside (in exchange for extreme risk), you’ve arrived at the right place, I suppose.

Carrying only modest stability in the balance sheet against core metrics, Lizhi’s main strength is its top line. Per Gurufocus, its three-year revenue growth rate clocks in at 17.9%, ranked better than nearly 70% of its peers. Still, you should note that the investment resources labels LIZI a possible value trap. That being said, Citi’s Vicky Wei pegs LIZI a buy. The expert forecasts a price of $1.70, implying over 151% upside potential.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.

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