Why E-Commerce China Dangdang Inc. Is Up 40% in 2014

Dangdang has come up big for investors this year.

Jul 2, 2014 at 2:04PM

It's been a good year for investors in China's leading online retailers. Vipshop -- the fast-growing provider of flash sales on brand-name apparel -- has seen its stock more than double through the first six months of 2014. E-Commerce China Dangdang (NYSE:DANG) hasn't been as buoyant, but shareholders are unlikely to complain about the 40% return amassed during the first half of the year.

Dangdang got off to a strong start. In late February, it posted blowout quarterly results. The 22% uptick in revenue for the quarter and all of fiscal 2013 may not seem very impressive, given that most of China's publicly traded Internet retailers are growing substantially faster, but Dangdang did surprise the market with a return to profitability for the period. That was enough to make the Web-based seller of books, media, and other general merchandise a big winner during the first few months of the year. 

Dangdang's subsequent quarter wasn't so hot. Revenue growth may have accelerated -- up 30% for the period -- but weaker-than-expected top-line guidance tripped up investors. Bank of America downgraded the stock after the unflattering report, lowering its price target on the shares from $23 to $15. The move came as a sharp contrast to Vipshop, which itself posted better-than-expected results, with at least two analysts boosting their price targets following the well-received results. 

Mixed showings suggest that Dangdang hasn't earned this year's 40% pop, but have you been keeping tabs on investor appetite for China's online retailers? We've seen IPOs skyrocket and dot-com giants buying up stakes in leading e-tailers. Buzz about Alibaba going public in the coming weeks has only intensified the spotlight on e-commerce in the world's most populous nation. This has made the niche a fertile turf for investors with the risk tolerance to buy into China's growth darlings.

The second half of the year will be challenging. Dangdang will have to sustain its newfound profitability and, even though analysts see that happening -- expanding on that nicely in 2015 -- Dangdang's volatile history will result in Mr. Market's swift judgment if it doesn't deliver.

An earlier-than-expected return to profitability coupled with IPOs and M&A activity have made Dangdang popular. Sustaining the attention will be all on Dangdang.

Dang! This coming device has every company salivating
Companies like Dangdang that are yielding substantial returns for investors tend to catch everyone's eye, but the best investors consistently reap gigantic profits by recognizing true potential earlier, and more accurately, than anyone else. Let me cut right to the chase. There's a product in development that will revolutionize not just how we buy goods, but potentially how we interact with the companies we love on a daily basis. Analysts are already licking their chops at the sales potential. In order to outsmart Wall Street and realize multi-bagger returns, you will need The Motley Fool's new free report on the dream team responsible for this game-changing blockbuster. CLICK HERE NOW.

Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Bank of America. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers