Investing

The 10 Best Chinese Stocks to Own Now

SINA Corp. (NASDAQ: SINA) is another of China’s top Internet companies, offering advertising driven portals for both desktop and mobile users. It is also the majority owner of Weibo, which is often referred to as the Twitter of China. SINA’s market cap has dropped 50% to around $3 billion since peaking last October at $92.83. The stock posted its 52-week low of $42.40 late last month. The Chinese government yanked several of SINA’s licenses in April, charging the company with hosting pornographic content.

SINA shares have been pounded to the point that some might not think it can keep dropping in a bull market. Its stock is likely to rise, perhaps handily, once the company straightens out its troubles with the government. The company’s implied gain based on a consensus price target of around $72 is 58%. Whether that is realistic is arguable, and a lot depends on how Weibo performs. But there is an opportunity here.

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Trina Solar Ltd. (NYSE: TSL) is among the top producers of solar power systems globally, competing against many solar companies in China, the United States and elsewhere. A fresh capital raise of $150 million in notes and 8.8 million shares sold may help buffer the recent tariff and duties war that recently came from the United States. At $11.15, its 52-week range is $5.00 to $18.77, and its market cap is close to $900 million before considering the new shares and convertible notes. Sales were $1.77 billion in 2013 and are expected to grow to almost $2.5 billion in 2014 and almost $3 billion in 2015.

Trina Solar‘s 2014 is supposed to be the breakout year for profits, and it trades at only about 10 times expected earnings. Thomson Reuters has a consensus price target of $19, but this may now be tempered to upside of say $15 in a mild bull market and recovery scenario ahead, based on the new tariff impact.

Yingli Green Energy Holding Co. Ltd. (NYSE: YGE) is another Chinese solar maker that focused on a vertically integrated manufacturing model, making everything from silicon wafers to finished panels. And like its Chinese compatriots, the company now faces a new U.S. tariff following the closure of a loophole that let Yingli, Trina Solar and others ship panels that had been assembled from Chinese parts in another country. Yingli’s market cap is a modest $455 million, with shares about 65% below the high of $8.77 posted last October.

Yingli’s implied gain based on a consensus analyst price target of around $5.60 is a whopping 92% above the recent closing price of $2.93. In a bull market, Yingli is worth more than $3 a share — maybe not as much as the current price target, but certainly more than $4.

In conclusion, we would remind readers that these are based on a stable to gradually rising stock market. All of these would likely fall if the U.S. experiences an unexpected serious sell-off. Also, keep in mind that none of these company shares are appropriate for what is called “widows and orphans” in suitability tests. China comes with huge opportunity, but there are also risks that quite frankly most investors do not know about nor that they pay attention to. These outlooks are as of early June, so they can change at any time. The outlook on each will certainly change with market conditions and as their prices change, and based on the news flow of each company.