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3 Chinese stocks to buy before they skyrocket in 2023

Finding the best Chinese stocks to buy can be tricky.

The pandemic-induced lockdowns have had a crippling effect on China’s tech industry, hitting manufacturing and clouding the industry’s outlook.

However, amid these challenges, a silver lining is emerging for forward-thinking investors, as major Chinese stocks to buy now feature attractive valuations to capitalize on a recovering economy.

It’s been a rough ride for Chinese stocks, with the Covid pandemic and Beijing’s strict policies hampering economic performance. Added to this is regulatory scrutiny targeting technology and data-driven companies.

There are many major Chinese stocks to buy right now, giving investors a unique opportunity to tap into an undervalued market with promising growth potential. So when considering the best Chinese stock picks, it is imperative to look for resilience and potential in this turbulent landscape.

Ali Baba (BABA)

Source: zhu difeng / Shutterstock.com

The Chinese e-commerce giant Ali Baba (NYSE:BABA) rebounds again after being weighed down by a myriad of headwinds. Over the past three years, BABA stock has taken a hit of more than 60% but is currently trading in the green. Analysts expect a whopping 74% upside from current price levels.

The company is back, posting impressive numbers again and reshaping its business structure. In the first quarter, it exceeded both high and low estimates.

Its strong growth was driven by its international trade segment, which saw an incredible 29% year-over-year growth. Additionally, while its cloud segment saw a slight decline in the quarter, it climbed a remarkable 4% year-on-year.

The company is set to spin off its cloud division by turning it into an independent entity via a distribution of stock dividends to shareholders.

The segment has proven to be a gold mine for Alibaba, with the sector’s revenue growing from 2018 to 2022 at a staggering rate of 451%. This flourishing titan is far from slowing down.

Tencent (TCEHY)

Tencent (TCEHY) sign at Tencent headquarters in Shenzhen, China.

Source: StreetVJ / Shutterstock.com

Tencent (OTCMKTS:TCEHY) is another Chinese tech giant looking for a dramatic comeback. He is able to carve out an expansive path in advertising, fintech, games and artificial intelligence.

It effectively leverages its growth multipliers with a well-designed strategy to foster sustainable expansion.

Tencent’s ambition is based on its massive investment in AI, aiming to improve its existing services while discovering new opportunities.

Its innovations in artificial intelligence effectively energize social and gaming domains, redefining user experiences and operational efficiency. As China’s macro sentiment improves, Tencent’s sales are expected to rebound, driven primarily by its booming video account segment and mobile gaming segment.

Additionally, it is looking to improve its margins through impressive initiatives such as monetizing Tencent Meeting and reducing loss-making divisions.

This is demonstrated by its robust profitability figures, with annual growth in its EBITDA, leveraged free cash flow and net profit margins of 16.3%, 15.6% and 33.5%, respectively.


Close-up of the BYD (BYDDY) logo on a red car, symbolizing BYDDY stock

Source: shutterstock.com/Trygve Finkelsen

BYD (OTCMKTS:BYDDF) has established itself as one of the leading manufacturers of electric vehicles in China. It outpaced its regional rivals, recording a staggering 411% year-on-year jump in net profit in the first quarter.

Despite a price duel with the EV pioneer You’re here, BYD continues to deliver strong numbers, breaking its own records quarter after quarter. However, the company’s ambitions are not limited to its territory alone, as it is targeting Asia, Europe and the United States.

It recently released its first-quarter new energy vehicle deliveries of 552,076, an increase of more than 90% year-on-year from the year-ago period, with BYD at full speed. As we move forward, he is aiming for a bold sales target of 4 million EVs in 2023. Therefore, BYD could redefine the landscape of the EV industry at this speed. With investments from heavy hitters like Warren Buffet behind his back, he can continue pushing afterburners for the foreseeable future.

At the date of publication, Muslim Farooque did not hold (directly or indirectly) any position in the securities mentioned in this article. Opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines

Muslim Farooque is a passionate investor and an optimist at heart. A long-time gamer and tech enthusiast, he has a particular affinity for analyzing tech stocks. Muslim holds a Bachelor of Science in Applied Accounting from Oxford Brookes University.


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