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jurajholik

VIPS (Long) - Undervalued Outperforming Chinese Gem

Long
Vipshop Holdings Limited (NYSE:VIPS)  
jurajholik  
NYSE:VIPS   Vipshop Holdings Limited
Fundamental Analysis Technical Indicators Chart Patterns chinastocks accumulation BASE china breakout swingtrading investing
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fundamental indicator chartpattern chinastocks accumulation base china breakout swingtrading investing
Fundamentals
  • The Chinese market has not performed rather well year-to-date, which makes the price action of VIPS that more impressive.
  • Despite the wider market struggling, the firm showed strong growth last year with 35% growth in earnings. The recovering Chinese market might propel even more demand (which is the Chinese government actively supporting) and of which VIPS would be one of the major beneficiaries
  • The company is also quite undervalued with P/E = 9.8 and P/S = 0.6
  • The fundamentals are pristine with negligible amount of debt and high returns on equity and assets
  • The market is smelling internal strength and earnings next week might serve as a perfect propellent to rocket the stock out of the base

Technicals
  • The company has been basing and creating a rounding base since the start of the year
  • My main selling point is the impressive relative strength. While the Chinese tech market has been deteriorating since the start of the year, VIPS has been standing strong, buying back every possible breakdown. I have been actively watching price action on this stock for two months and investors are actively buying any potential downside.
  • Relative strength against KWEB is shown at the bottom of the chart, clearly pointing higher; RSI is breaking above 60; MACD is breaking out; stochastics are showing strength and the A/D line has been strengthening throughout the basing process
  • Overall, the pattern very much looks like a bull flag about to break out

Trade
  • One option is to enter now and catch a perfect buy point, but then there is a need to risk a negative earnings surprise (I chose this option and entered today)
  • Or wait until after the earnings which would be safer but risking a worse buying point; decision is up to your risk appetite

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