Alibaba Stock: Bullish Sign as Hedge Fund Guru Ray Dalio Buys

Why Alibaba Deserves a Much Higher Valuation

For those that follow the hedge fund industry, you know that Ray Dalio, the founder of hedge fund Bridgewater Associates, LP, is a generational investor.

So, when Bridgewater purchased 84,629 shares of Alibaba Group Holding Ltd (NYSE:BABA) in 2018, you know that it was a bullish sign for BABA stock, despite the position representing a tiny portion of the fund.

But nevertheless, it was a start that could signal larger purchases of BABA stock in the future.

Now, as many of you know, I didn’t need Dalio’s move to support my bullish thesis on Alibaba. I have been bullish on BABA stock from the early days and never wavered, even amid the trade war with China.

Alibaba is half of the size of Amazon.com, Inc. (NASDAQ:AMZN), but still has a whopping market cap of $463.0 billion, which makes the company the fifth or sixth largest in the world.

While Alibaba is a mega-sized company, my view is the company has much more room to grow and we may only be in the early innings.

On the chart, BABA stock is hovering at around $177 with a pathway to retesting resistance at around $188.00 to $190.00:

Chart courtesy of StockCharts.com

Year-to-date, BABA stock is outperforming the Nasdaq.

The high point for Alibaba Group Holding Ltd was $211.70 in June 2018. I fully expect BABA stock to eventually take out this high mark; it’s a question of when, not if.

This is Why BABA Stock Can Produce Another Double

The catalyst for Alibaba is the company’s innovation and desire to always look at ways to strengthen the company.

Co-founder Jack Ma is no longer actively running the day-to-day operations of Alibaba, but the company appears to be in good hands.

In an intriguing move and perhaps driven in part of the China trade war, Alibaba Group Holding Ltd is planning a secondary listing on the Hang Seng Index in Hong Kong. The strategy will reduce some of the listing risk for the company in the U.S. in case things worsen.

Alibaba also just announced it would allow smaller U.S. companies to list on its site and sell to retail and commercial buyers in China.

The move is aimed at the small to mid-sized American companies who had been restricted to sell in China. These companies were only allowed to buy from China.

If successful, the strategy would open up the massive Chinese market to U.S. companies—something that could disrupt the competitive landscape in China. Even President Donald Trump has to like this action by Alibaba.

And in the hardware space, something Alibaba has been working on, the company just developed its first processing chip for artificial intelligence applications, “Xuantie 910.” While there are still questions regarding the chip and its capabilities, the development represents a milestone for Alibaba in the hardware space.

Analyst Take

I’m pretty sure we will be sitting here a decade from now and BABA stock will be worth twice as much.

The company is generating massive revenue growth and is turning out mega free cash flow. The stars are aligning for Alibaba Holding Group Inc and you want to be there.