Vipshop Holdings Ltd. (VIPS)

The Chinese stock market is currently about half of what it was at its peak 17 years ago.

Long term investors are frustrated. But for those who have managed to avoid the fray until now, the Chinese stock market is becoming increasingly interesting from a valuation perspective.

For example, the Chinese stock market is currently trading at a 10.59% earnings yield (earnings/market cap).

That’s an attractive earnings yield. The last time the U.S. stock market traded at a 10.59% earnings yield was in 1984. Investors who had put $1 million in the market then would have $34 million now.

This leads us to our stock pick which is Vipshop Holdings Ltd. (VIPS).

Vipshop is an online retailer which sells items such as clothes, cosmetics, and food. The company is trading at a 11.41% earnings yield. Vipshop has increased their earnings by 1,758% over the last 10 years. That is a growth rate of 33.9% a year for 10 years. The growth has been consistent as well, up over the previous year in eight of the last 10 years.

For those concerned about the “road to nowhere” Chinese stock market, VIPS has gone up over 31x times what the Chinese stock market has since VIPS started trading in the US market in 2012.

VIPS had a 6,866% bull run in 2012-2015 and a 912% run in 2018-2021. 

The stock put in a major bottom in 2022. With VIPS trading at such unchallenging valuations, it is quite easy to visualize the stock having a good year ahead.
Sell 35.96% of BILS. This will change the Equity Model Allocation from 18.52% to 11.86%

Buy 6.66% of the Equity Model into VIPS
Neil Jesani CFP, Andrew Constantinides IAR, Jacob McCue CFA, Michael Foulkes, Christopher Rose, Nikhil Khandelwal CFA, Sofiya Shoiab Esq.
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