This year’s spectacular run of gains for the markets have been powered largely by tech stocks. Recently, major tech names suffered grievous losses, primarily due to concerns about exorbitant valuations. However, a spate of strong earnings numbers have put paid to most of these doubts.
But such gains pale in comparison to those notched up by their counterparts in China. Not only have such gains been considerably higher, in some cases they have been nearly twice as much. This is why investors looking for handsome profits would do well to look at options from China when shopping for high performing tech investments.
China’s Tech Stocks Race Ahead of U.S. Counterparts
The enormity of the gap between the gains made by U.S. tech stocks and their China counterparts is visible from the performance of the KraneShares CSI China Internet ETF KWEB. One of the most popular options among investors looking to obtain exposure to China’s tech sector, the fund has gained 56.3% year to date.
Meanwhile, the Guggenheim China Technology ETF CQQQ has moved up 45.5% so far this year. Both ETFs have broken multiple records in the course of their winning run.
Lagging these two leading performers is the Global X NASDAQ China Technology ETF QQQC, which has gained 26.4% year to date. However, even this ETF has surpassed the performance of U.S. tech stocks by a wide margin. While the Technology Select Sector SPDR (XLK - Free Report) has gained 18.8% year to date the Nasdaq Composite and the Nasdaq 100 have gained 18.2% and 21.2%, respectively over the same period.
Baidu Leads Gains for China’s Tech Sector
The outperformance of individual stocks can be judged from the performance of Baidu, Inc. (BIDU - Free Report) , which has gained 37.2% year to date. In contrast, Alphabet Inc. (GOOGL - Free Report) has gained 19.5% over the same period. Most of this year’s tech fueled gains have been driven by the FAANG group of stocks, which includes the U.S. based search engine giant.
Similarly, social media platform operator Weibo Corporation (WB - Free Report) has increased by 91.3% till now in 2017, compared to Facebook, Inc.’s (FB - Free Report) 47.6% increase. While Amazon.com, Inc. (AMZN - Free Report) has increased 32.9%, Alibaba Group Holding Limited (BABA - Free Report) has gained 76.2%, more than two times as much. This shows us that despite U.S. investors’ predilection for betting on the FAANG members, they have been clearly outclassed in terms of performance by their China tech peers.
Tech stocks have fueled the lion’s share of gains for U.S. stocks this year. However, concerns over valuations have threatened to spoil the party on several occasions, leading to short lived yet sharp losses.
In contrast, the ascent of their China counterparts has been more or less unimpeded. Investors looking for strong gains would do well to consider these stocks in addition to more popular U.S. tech names. We have narrowed down our search to the following stocks based on a good Zacks Rank and other relevant metrics.
Tencent Holdings Limited (TCEHY - Free Report) is an Internet service portal. Tencent provides value-added Internet, mobile and telecom services and online advertising.
Tencent Holdings has a Zacks Rank #1 (Strong Buy) and its projected growth for the current year is 46.9%. Its earnings estimate for the current year has improved by 5.6% over the last 30 days. The stock has gained 66.9% year to date.
Changyou.com Limited is a developer and operator of online games in China.
Changyou.com has expected earnings growth of 18.2% for the current year. Its earnings estimate for the current year has improved by 7.2% over the last 30 days. The stock has gained 100.1% year to date. The stock has a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Autohome Inc. (ATHM - Free Report) offers an online destination for automobile consumers primarily in the People's Republic of China.
Autohome has a Zacks Rank #2 (Buy) and its projected growth for the current year is 28%. Its earnings estimate for the current year has improved by 1.3% over the last 30 days. The stock has gained 93.9% year to date.
Baozun Inc. (BZUN - Free Report) offers digital and e-commerce services primarily in China.
Baozun has a Zacks Rank #2 and its projected growth for the current year is more than 100%. Its earnings estimate for the current year has improved by 3.5% over the last 30 days. The stock has gained 169.2% year to date.
Momo Inc. (MOMO - Free Report) provides mobile-based social networking platform primarily in China
Momo has a Zacks Rank #2 and its projected growth for the current year is more than 100%. Its earnings estimate for the current year has improved by 2.1% over the last 30 days. The stock has gained 145.1% year to date.
More Stock News: Tech Opportunity Worth $386 Billion in 2017
From driverless cars to artificial intelligence, we've seen an unsurpassed growth of high-tech products in recent months. Yesterday's science-fiction is becoming today's reality. Despite all the innovation, there is a single component no tech company can survive without. Demand for this critical device will reach $387 billion this year alone, and it's likely to grow even faster in the future.
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