By: Dividend Sensei
Alibaba has become one of the most contested companies on Seeking Alpha, thanks to its worst bear market in history, causing a nearly 60% peak decline.
According to 68 analysts, rating agencies, and the bond market, BABA’s growth thesis has weakened, but not broken.
Historically, BABA growing at 14% is worth 26X earnings, and it trades at 15.8 and under 12, including cash. It’s 41% undervalued and a classic Buffett “fat pitch” blue-chip bargain.
Over the next five years, analysts expect BABA could deliver 220% returns, or 24% annually, with 5X the risk-adjusted expected returns of the S&P 500.
Charlie Munger has invested $67 million into BABA and I’ve bought $135,000 into this Buffett-style “fat pitch” speculative opportunity because A+ rated BABA is as close to a perfect speculative deep value growth investment as exists on Wall Street. As Buffett says, “When it’s raining gold, reach for a bucket, not a thimble.”