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Why This Chinese Stock Is An Excellent Buy Right Now

Why This Chinese Stock Is An Excellent Buy Right Now

It’s trading for cheap and is likely to soar in the next twelve months. Here’s what you need to know about this stock.

The recent sell-off in tech stocks has been a doozy, and if you’re looking to take advantage, Chinese social media giant Momo Inc (NASDAQ: MOMO) is a great stock to consider.

If you’re not familiar with Momo, it’s most closely comparable to online dating apps operator Match Group (NASDAQ: MTCH) in the U.S. and has been called the “Tinder of China.” 

The company focuses on connecting users who are in the same geographical area and near one another, while also pairing people up based on interests and preferences.

But Momo isn’t just for online dating and social networking.

Momo has also broken into the booming streaming video business, which has been a big boon for the company and has become a core growth driver. In its eponymous streaming app, Momo monetizes through user-generated live video streams with virtual gifts that viewers can purchase for their favorite broadcasters.

The company has earned a reputation for itself for its large user base and location-based online data. And while many investors are more familiar with big Chinese tech names like Alibaba (NYSE: BABA) and Weibo (NASDAQ: WB), Momo boasts the same kind of growth numbers.

In fact, in its second quarter this year, Momo’s revenue jumped 58% year-over-year to $494.3 million, with live streaming revenues accounting for 83% of that total, with its earnings per share surging more than 70%.

And for the year? EPS growth is estimated to come in at a jaw-dropping 119.8%, with an estimated 25.97% for 2019.

Monthly active users on its core app also rose 18% annually to 108 million users in its last quarter, and its total number of paid users climbed 63% to 11.6 million.

These are incredible numbers for a stock that is trading at just 10.5 times forward-looking earnings, and the stock is so cheap simply because investors fled from Chinese tech stocks as trade war fears mounted and interest rates began rising.

But the sell-off gives investors a fantastic opportunity to buy this gem of a growth stock at a steep discount. And analysts agree that Momo shares are undervalued. Their consensus twelve month price target for the stock is $50.60, or 56.46% higher than the current price.

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