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Why JD.com Is My Top Chinese E-Commerce Stock

By Jeremy Bowman and Brian Withers – Sep 7, 2021 at 6:46AM

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Here's the bull case for China's biggest retailer.

There are a lot of options for investors to choose from in Chinese e-commerce.

In this Backstage Pass segment recorded on Aug. 23, Fool contributors Jeremy Bowman and Brian Withers explain why JD.com (JD -5.32%) is their favorite in the sector. Among JD's assets are its vast logistics network, innovative technology, and its push into new industries like telehealth and supermarkets.

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Jeremy Bowman: I think my favorite of the three for a while has been JD.com. I like what they are doing a lot in logistics. I think they are building out a lot of the competitive advantages that we've seen with Amazon as far as logistics. They started off doing first-party. They're adding more marketplace sales. They can provide logistics services as well. I like the way they are moving into healthcare with an online pharmacy. I think they are doing some telehealth things, which is pretty cool. They've added on groceries. They started off as mostly selling electronics and appliances, and they've really branched out from there. I think they have a lot of optionality and growth opportunities.

Brian Withers: Yeah. I forgot to mention that too, Jeremy. You brought up a great point is they are the largest grocer in China. They have a massive grocery business as well. With 1,200 warehouses around the country, I think they are better positioned than anyone to capture that business, and that's an absolutely great business from a regular purchase standpoint and getting people hooked on your platform, as long as you deliver high-quality products that get delivered in a timely fashion. I'm with you. I like JD.com. I never really liked Alibaba from the beginning. One, I think it went public at $100 billion market cap. Part of it is they were already huge and they were facilitating a massive amounts of sales. I normally would like the third-party model, Sea Limited and MercadoLibre play in that space, but I geek out on the tech with these guys and I think they are doing a lot of neat things and have really established their investments over the last five years plus. Have really put them in a tremendous position to continue to grow profitably over time. Now, you'll see quarters like this one where, this is not unlike Amazon, which would one quarter invest a bunch of money and then they would barely eke out a profit, and then the next quarter, they wouldn't, and they'd post really great profits. This is not unprecedented in what's going on. If you're interested in e-commerce in China, you ought to look up JD, and I think you have to be patient.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jeremy Bowman owns shares of Alibaba Group Holding Ltd., Amazon, and JD.com. The Motley Fool owns shares of and recommends Alibaba Group Holding Ltd., Amazon, and JD.com. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. The Motley Fool has a disclosure policy.

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Stocks Mentioned

JD.com Stock Quote
JD.com
JD
$49.48 (-5.32%) $-2.78
Amazon Stock Quote
Amazon
AMZN
$93.41 (-0.77%) $0.72
Alibaba Group Holding Ltd. Stock Quote
Alibaba Group Holding Ltd.
BABA
$75.50 (-3.82%) $-3.00

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