From Cabot Wealth Advisory 11/17/14 Sign up for Cabot Wealth Advisory—it’s free!
One of my most common caveats to people when it comes it investing is this: there are many successful investing systems, but not all are right for you. To become a successful investor, you have to find the system that is right for you, and then follow that discipline.
Which is a way of saying that today’s recommendation is not for everybody.
But if you appreciate the growth potential of China in general—
And if you appreciate the profits that can pile up rapidly in less well known, fast-growing companies—
Then maybe you’d like to invest in Vipshop Holdings (VIPS), or, as Paul Goodwin labeled it back when he first recommended it: Very Important People Shopping
Here’s part of his recommendation.
“Vipshop Holdings is thriving where two major trends in modern China meet. The first is the rapid adoption of mobile technology, including an ongoing rush to 4G smartphones. The second is online retailing.
“Vipshop Holdings offers fashionable merchandise, including clothing, shoes, accessories, cosmetics and more, all at discounted prices. But what really makes Vipshop special is that sales are all discounted online flash sales. That means limited amounts of each product are offered for limited amounts of time, and at a significant discount to full retail, usually 50% to 70% below original retail.
“China has no national discount chains, so Vipshop is becoming one, but doing it online.
“Results have been outstanding, with three full years of astonishing revenue growth—1,059% in 2010, 597% in 2011 and 205% in 2012—and strong growth through the first three quarters of 2013 averaging 170%.”
When Paul wrote that, back in January, the stock was trading at 106. Since then it’s split 10-for-1, so readers who followed his advice actually got in around 10.
And today it’s trading around 25, meaning they’re looking at a profit of 150% in less than 10 months. And the stock is still climbing!
So, you could just buy VIPS here.
But a smarter move would be to check on Paul’s latest advice on the stock, which looks a little extended to me.
Also, you’ll want to see what else he’s recommending today, and ideally, if you’re serious about making money, get his wisdom every week. Get more details here.
By Paul Goodwin, Chief Analyst, Cabot China & Emerging Market Report
From Cabot Wealth Advisory 8/7/14 Sign up for Cabot Wealth Advisory—it's free!
My stock pick for this issue is a stock that has been in the portfolio of Cabot China & Emerging Markets Report since January 31. The company is Vipshop Holdings (VIPS) and I recommended it when it was trading at 103.
The company is an e-commerce site in China that makes the bulk of its money from flash sales of name-brand fashion and lifestyle merchandise.
With VIPS now trading at 206 after pulling back from a high of 217 in late July, many investors might think the stock was either a) cooked because of its 5% correction or b) too extended after a more than 100% run.
Here’s where the part about learning from the mistakes of others comes in. VIPS has actually gone up a heck of a lot more than 100%. If I had been given a message from the future back in August 2012, I could have recommended the stock when it was trading at 5. The resulting 4,120% gain would have blown away the actual paltry 100% jump as if it were nothing! That’s the kind of gains you can always expect with the benefit of hindsight.
The real point, however, is this: believing that an already large gain indicates a lowered probability of future gains is just dumb. You could have avoided buying VIPS a hundred times along the way because it had already doubled so many times. It’s one of those “mistakes of others” that you don’t need to make because other people have already made it for you. And the hard-won wisdom is that stocks (and market trends) can go on much longer than you think they can.
As to the notion that VIPS shouldn’t be bought because of its correction, I would refer you to the slow shakeout the stock went through from March through early May. I let my subscribers hang on to VIPS through that correction because we had a nice profit cushion and I knew that growth stocks love to try investors’ patience and then take off again when the weak hands have been worn out.
I can’t say that VIPS is going to double again or make any prediction at all about what it will do. But Vipshop Holdings is a company that has enjoyed three years of triple-digit revenue growth and has seven quarters of rising EPS growth under its belt.
I still have VIPS rated buy for my subscribers, and I’d make the same recommendation for you.
For further updates on VIPS and to view additional strong emerging markets stocks with high potential, consider taking a risk-free trial subscription to Cabot China & Emerging Markets Report. More details here.
From Cabot Wealth Advisory 1/8/13 Sign up for free Cabot Wealth Advisory e-newsletter
My stock pick today is a company that has many of the earmarks of a potentially big winner. It’s Vipshop Holdings (VIPS), a Chinese online retailer that specializes in flash sales, the kind of online offerings that last only for one day, or even for just as long as inventory lasts.
Vipshop Holdings was founded in 2008, and has marketing partnerships with over 360 brands, which allows goods to be offered at discounts of 50% to 70% off original retail. The company’s online presence makes it essentially the first national off-price retailer in China, since there are no TJ Maxx or Marshalls chains there.
Revenue growth has been enormous, which is what happens when you start from zero. Revenue growth was over 1,000% in 2010 and nearly 600% in 2011. And the company just booked its first quarter of positive earnings (a penny per share) in Q3, a quarter that featured revenue growth of 197%. VIPS came public at 6 in March 2012 and put in a five-month post-IPO base. But when the breakout came in August, the stock showed some real speed. VIPS is now trading at 18 and volume has been robust.
I have VIPS on the watch list for the Cabot China & Emerging Markets Report, waiting for a suitable pullback to provide a buy point. The stock just spent nine days trading under resistance at 18, which may be the pause I’ve been looking for. I think VIPS is buyable on any breakout above 18, especially if volume is above average.
More information on Cabot China & Emerging Markets Report.
|Vipshop Holdings (VIPS)
No 20 Huahai Street, Liwan District
Guangzhou, 510370 China
86 20 2233 0000
|Index Membership: N/A
Industry: Internet Service Providers
Full Time Employees: 2,934
8/7/14 Vipshop Holdings (VIPS): Still plenty or growth here
1/8/13 Vipshop Holdings (VIPS): Marketing partnerships with over 360 brands