Can Continued Growth Fuel JD.com, Inc. (NASDAQ:JD) To Reach New Levels?

JD.com, Inc. (NASDAQ:JD) shares have been experiencing accelerated earnings and sales growth over the past five years.  Over that time frame the firm has seen earnings growth of 10.00% and sales growth of 46.10%.

Doing standard fundamental stock analysis is fairly straightforward. These days, investors have easy access to large amounts of available data. The biggest problem for the average investor may be dedicating the time to actually doing the research. One goal of studying the fundamentals is to establish the true value of a stock compared to how it is currently trading in the marketplace. Many investors believe that identifying quality stocks should be a cornerstone of portfolio construction. Obtaining as much knowledge as possible about a stock can help make the buying decisions a little easier. Some investors may trust other people or products to do the required research, but others may wish to roll up the sleeves and do all the analysis themselves.

While the firm has enjoyed the upward movement, it’s important to look at analyst expectations and where the company is headed from here.  On a consensus basis, analysts are projecting EPS growth of 52.41% for next year and have a $33.41 one year price target on the stock.   The stock recently traded at $30.65.

 Six Fundamental Characteristics of Great Growth Stocks

#6 Huge Mass Markets – The more potential customers there are, the greater the possibility that both the company, and the investment in said company, will be a success. 

#5 Market Dominance/Barriers to Entry – Look for companies who hold patents.  This is great barrier to entry, ensuring no competition.  Look for companies who dominate the market, blowing away the competition, though market dominance can be harder to measure. 

#4 Accelerating Earnings Growth – If a company’s earnings growth rate increases for two consecutive quarters, their growth is accelerating.  Faster growth is better growth, and a company whose earnings growth rate is accelerating is an attractive investment.

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#3 Triple-Digit Revenue Growth – Companies growing their revenues at triple-digit rates (100% or better) are usually smaller and less known, making them attractive for buying by institutions. 

#2 High Profit Margins – In recent decades, high-margin stocks have beaten low-margin stocks by a huge amount. 

#1 Top Notch, Innovative Management – All great managers who led their companies to success usually did so by thinking differently.  There is no surefire and quick measurement of management talent.  When you find a top manager, one with a record of prior success and accolades, you should strike.  Top managers usually find a way to overcome obstacles. 

Let’s take a look at how the stock has been performing recently.  Over the past twelve months, JD.com, Inc. (NASDAQ:JD)‘s stock was 45.77%.  Over the last week of the month, it was -3.14%, 1.13% over the last quarter, and  28.79% for the past six months. 

JD.com, Inc. (NASDAQ:JD)’s EPS is 0.31.  Last year, their EPS growth was 97.10% while their EPS growth over the past five years is 10.00%.  Analysts are predicting JD.com, Inc.’s stock to grow 52.41% over the next year and 4.84% over the next five.

Investors might be preparing to do a portfolio evaluation as we move towards the close of the year. There may be plenty of big winners from the first half of the year, but there may also be some underperformers that need to be reviewed. Making sure that the portfolio stays in balance can help prepare the investor for success over the next few quarters. With the stock market still riding high, investors may be wondering how to play the market into the near future. If market momentum starts to shift, investors may need to be ready to make some tougher decisions. Being prepared for any market situation can help the investor cope with rough waters when the time comes.        

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