“Is Alibaba one of the best stocks?” The Take Stock In This system says “yes.”

Danial Jiwani is the author of the runaway best-seller Take Stock In This. He is dubbed “the modern Benjamin Graham” for writing a book that readers say “is the best book on investing since The Intelligent Investor.

Jiwani evaluates all stocks using the Take Stock in This system described in his book. One of the stocks that has come up as being a strong buy with his formula is Alibaba.

Why Alibaba is a Terriffic Investment 

Since 2024, Jiwani has purchased enough shares in Aliaba to make it within the largest investment within his portfolio. In the past 6 months, Alibaba shares are up over 73%, creating quick gains for “the modern Benjamin Graham.”

One of the reasons he likes Alibaba is for its moat. There are very few companies that can come close to competing with it. More imoprtantly, the company is cheap. It trades at some of its lowest valuations it ever has in recent history. The stock is down over 50% from its 5-year highs, making it an affordable option.

However, there is lots of pessimism about Chinnese stocks given current geopolitical tensions. But, Jiwani views the geopolitical tensions as a classic opportunity to be “greedy when others are fearful,” as Ben Ghaham says.

The Company also faces headwinds from competitors. Most investors should be concerned about the increasing competition from companies like PDD Holdings. But one way to mitigate the risk is by investing in the competition itself. 

Jiwani, for example, has invested in Aliaba’s main competitors–PDD Holdings and JD.com–to diversify away the competitive risks. If Alibaba shares fall due to competitive pressures, his shares in PDD Holdings and JD.com should perform offset the decline in Alibaba’s share price.

Jiwani’s decision to invest in Alibaba has been poorly timed. He initiated building his position in Alibaba when the company traded at its 5-year highs of $309 per share. Today, the stock only trades for $140 per share. “We overpaid for Alibaba. I bought it too early initially. That was a big mistake. But it’s largely been offset by lowering our cost basis when the stock traded for only $100.”

Alibaba’s commerce revenueonly  grew 5% year over year in the December-ending quarter. Despite the slow commerce growth rate, the company is tapping growth opportunities through other channels. “Its international commerce business, including AliExpress, grew revenue by 32% over the year-ago quarter,” according to the Motley Fool.

Alibaba also benefits from the artifical intlligence tailwind. “Alibaba's cloud business grew 13% year over year last quarter,” said one Motley Fool analyst. “Given the triple-digit growth for AI-related products, this business could see accelerating growth over the next few years, which is a catalyst for the share price.”

Disclaimer: Danial Jiwani owns a long position in Alibaba.