Morgan Stanley recently upgraded the shares of this Chinese e-commerce company to ‘Overweight’.
SouFun Holdings (SFUN)
From Top Stocks under $10
SouFun Holdings (SFUN) used to be a real estate portal for China. But due to overbuilding—which depressed property values—the company has transitioned from providing real estate marketing services to an e-commerce site. It now provides home service, furniture, contractors services and building materials for do it yourself projects.
By all accounts the transition is working. Growth in the E-Commerce division increased by 76% in the last quarter and is now SFUN’s largest. Its contribution to topline sales is now 58% compared with 35% in 2014. And that growth should continue as China’s economy stabilizes.
I also like that China’s recent PMI numbers are back in expansion territory after multiple months of consecutive declines. Plus, its domestic stock market (still off its highs) has started to trend higher. Both are positives for SFUN.
With that, it’s a good time to get into SFUN if it knocks on the door at $6.00—a level it’s tested. In fact, this level has created an inverted triangle pattern consisting of higher lows (see the above chart) and should support a breakout in the next few days. But just to be safe, we’re going to place a stop loss order at $5.34 to prevent undue downside harm.
Mandeep Rai, Top Stocks under $10, published by Money and Markets, a Division of Weiss Research, Inc., www.moneyandmarkets.com/services/trading-services/top-stocks-under-10, issues@e.moneyandmarkets.com; 1-800- 291-8545, April 13, 2016