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3 Top Chinese Stocks to Watch in March

Chinese stocks are bouncing back lately, even with an iffy economy slowed by trade tensions and the COVID-19 coronavirus outbreak. Forward-thinking investors are starting to dive in anyway, and March is going to be an important month for the world's most populous nation.

Vipshop Holdings (NYSE: VIPS), Bilibili (NASDAQ: BILI), and Momo (NASDAQ: MOMO), are some of the more interesting names that will be reporting quarterly results later this month. They can build onto their already impressive recent gains with another strong report. Let's see why these are among the top Chinese stocks to watch in March.

Image source: Bilibili.

Vipshop Holdings

The good times are back at Vipshop Holdings. The online discounter of brand-name apparel has seen its stock more than double since bottoming out this past summer. Longtime investors remember when Vipshop was a market darling, more than doubling in three consecutive years between 2012 and 2014. The rare feat is highly unlikely to be repeated, but the stock did double in 2019.

Expectations aren't necessarily high heading into this Thursday's fiscal fourth-quarter report. Vipshop's own guidance in November calls for no better than a 5% uptick in year-over-year revenue growth, but it has historically been conservative with its outlooks.

This would seem to be company touching on the two headwinds facing Chinese consumers. The economy is bumpy, drawing shoppers to Vipshop's discounted apparel and accessories. Folks are also hesitant to go shopping in public, and that's where Vipshop's online model makes sense.

Bilibili

Another scorching hot stock is Bilbili. Shares of the online platform for anime, comics, and gaming hit another all-time high last week even as global markets were reeling. A neat distinction about Bilibili is its young audience. More than 80% of its users are part of China's Generation Z, basically folks between the ages of 11 and 21 who are typically hard for marketers to reach.

Bilibili has seen its base of monthly active users climb 38% to 127.9 million. Revenue grew nearly twice as fast in the third quarter, as improved monetization finds revenue per monthly active user climbing 25% in its latest quarter. Most of its audience are free users, but the thin slice of paying accounts has more than doubled over the past year. Bilibili reports on March 17, and its earlier guidance calls for 67% to 71% top-line growth for the quarter. Bilibili is another online company that seems to be well positioned for the current climate, with homebound teens looking for diversions to get through the coronavirus social restrictions.

Momo

We shift from young teens to a slightly older Chinese audience looking to hook up with other locals on Momo. The provider of online dating sites and social discovery platforms leans heavily on live streaming and virtual gifting to fuel its highly profitable model.

Growth has slowed lately at Momo. It attracts 114.4 million monthly active users, less than 4% higher than a year earlier, even though its premium user base has risen slightly faster. Revenue has decelerated sharply in 10 of the past 11 quarters.

Revenue rose 22% in the third quarter, and its earlier guidance calls for that pace to slow to an 18% to 20% clip when it reports later this month. Momo is the most likely of these three names to land somewhere else given how it fuels offline interactions. A lot has changed in China since Momo initiated its guidance in late November. But with the stock now trading for just 17 times trailing earnings, it's an interesting value here ahead of fresh financials.

If you're an investor who is willing to take on the risks associated with investing in Chinese stocks, Momo -- along with Vipshop and Bilibili -- are some of the top stocks to watch this month.

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Rick Munarriz owns shares of Bilibili. The Motley Fool owns shares of and recommends Bilibili. The Motley Fool recommends Momo. The Motley Fool has a disclosure policy.


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