Ok, I think it’s safe to say that Wall Street isn’t a fan of Alibaba (BABA) right now. It doesn’t seem like many investors want to touch this stock either, but for some reason or another, I keep finding myself drawn in to buy more shares.
You can call me an idiot if you’d like (and perhaps that’s justified), but this stock simply looks too compelling at current valuations to ignore.
Earlier this morning, I purchased 112 shares of BABA for $85.70/share. I now own 400 shares of BABA.
It’s very possible that I’m making the big mistake of “catching a falling knife”, but I prefer to look at things from a slightly different angle. For starters, today’s transaction reduced my cost basis from $99.34/share to $95.53/share… Prior to the two purchases I made in BABA this month, my cost basis was $105/share.
In the short-term, it’s generally no fun to see a stock you own dropping in price day after day, week after week, but in this case, I more than welcome it! I’m thrilled that I’ve been able to reduce my cost basis by another ~$4/share, while in the process accumulating a much larger position. 🙂
I’m nothing more than a retail investor, but I’ve been investing long enough to now be able to easily block out any negative emotions… It’s all a part of the game.
For those who remember, Facebook (FB) was a similar growth story that experienced huge hype prior to its IPO in 2012. The stock closed at $38.23 on May 18, 2012. From that point on, the stock proceed to go downhill, and one year later, it closed at $25.76 on May 20, 2013. If you were an investor from the start, talk about carrying around some dead weight!
Today, FB stock is doing much better and has doubled in value from that initial IPO price.
It’s not certain by any means that BABA stock will experience the same gains as FB… but I wouldn’t be surprised in the slightest to see similar (if not better) results. I think the key will be to remain patient, and let the market carry on… Stocks fall into and out of favor all the time, that’s just how the markets operate.
Here are some key BABA stats from Morningstar:
Well, I think it’s pretty straight-forward when it comes to analyzing BABA — It’s all about the growth!!!
Since I now own 400 shares in BABA, I’m at a comfortable position moving forward. If there are any more dips, I’ll most likely add another 100 shares or so… Aside from that, I’m going to ignore the noise and focus my attention on other stocks now.
As I recently shared with readers, I would like to build a portfolio comprised of about 22 holdings, spread out across various industries. Lately, I’ve been very focused on BABA because I feel that the stock is undervalued and presents a good entry point for investors. If the growth story holds, today’s price will look like a bargain many years from now.
Anyway, it’s about time for me to move on to other stocks… Gilead Sciences (GILD) is on my radar next.