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Why Alibaba Group Holding Ltd (BABA) Is One of the Best Stocks to Buy for 2018

By U.S. News & World Report

One might think it generally unwise to buy a stock that’s already doubled in the last year. And while Alibaba Group Holding Ltd (NYSE: BABA) could definitely be considered a momentum play, with shares up 96 percent in 2017, any investors interested in buying growth at a reasonable price should also consider the stock.

BABA was one of just seven stocks to be named one of U.S. News’ best stocks to buy for 2018. Here’s a quick look at what the company does (hint: it’s more than you think), and why it’s still a steal even after a remarkable 2018.

What, exactly, does Alibaba do? If you observe the stock market, you may have heard of Alibaba. It famously set the record as the largest initial public offering ever in 2014, as shares debuted on the New York Stock Exchange for $68 per share, raising $25 billion from the IPO.

[Read: The Best Bitcoin Wallet of 2018.]

Sometimes referred to as the Amazon.com ( AMZN) of China, the Chinese e-commerce giant dominates online retail in Asia’s largest economy, which, if you had to pick, isn’t a bad country to dominate. With China’s growing middle class, 1.3 billion people and 6 to 7 percent annual GDP growth, China is on track to inevitably surpass the U.S. as the largest economy in the world sometime in the next decade or two.

Its e-commerce operations are already massive: BABA is a company that literally did $25 billion of sales on “Singles’ Day” — the equivalent of “Black Friday” or “Cyber Monday” shopping holidays in the U.S. — this past November.

The similarities to Amazon don’t stop there. Alibaba, like its American counterpart, also has an impressive cloud computing arm that’s helping to stimulate its already prodigal revenue growth and boost margins. Cloud computing revenue grew 99 percent in the third quarter, compared to the company’s overall 61 percent growth rate.

While its sales to the Chinese public account for the vast majority of its revenue, BABA is ambitiously expanding its business internationally as well, where revenue growth came in at 115 percent last quarter.

[Read: 5 of the Best Stocks to Buy for January.]

And Alibaba also owns a big chunk of a little company called Ant Financial. “Little” might be the wrong word, as it’s the world’s most valuable fintech company, and the largest mobile-online payments company on the globe. Recently valued at around $75 billion — more than The Charles Schwab Corp. ( SCHW) — it’s also growing rapidly, with profits nearly doubling in fiscal 2017. BABA is entitled to 37.5 percent of all pretax profits and roughly one-third of the company upon its IPO, which is said to be in the works.

Alibaba is also part owner, along with Tencent and Baidu ( BIDU), of Didi Chuxing, China’s largest ride-sharing company, valued at more than $50 billion.

Alibaba’s valuation. It’s hard to make a cogent argument that BABA stock isn’t a steal at these levels, particularly when you compare it to other megacap growth stocks like Facebook ( FB), Alphabet ( GOOG, GOOGL) and Amazon.

Alibaba shares trade for 28 times forward earnings, which is precisely what Facebook goes for and only marginally more than the 26.5 times forward multiple on GOOG shares. None of those companies are growing nearly as quickly as BABA, where revenue growth accelerated last quarter.

If you have the stomach to invest in growth stocks and ride out the volatility occasionally associated with owning them, BABA is a perfect pick for you, and its relative value compared to some of the top U.S. technology and growth stocks on Wall Street makes it well worth including on the annual “Best Stocks to Buy” list.

Things to be wary of. Like any stock, Alibaba isn’t flawless, and there are a few potential pitfalls investors should be aware of.

The first commonly cited risk to owning Alibaba stock is its lousy corporate governance. Founder and CEO Jack Ma and a circle of insiders control about 95 percent of the company’s voting shares — in buying BABA stock, you’ve really got no say in how the company’s run.

This raises the possibility of management doing as it pleases without shareholder approval, for better or worse.

The other issue? Some observers worry that BABA’s numbers are so incredible that they’re too good to be true. To be sure, the consequences for fudging the books would be catastrophically bad for shareholders, but with scrutiny from the likes of Yahoo and other major institutional investors, it seems unlikely that the e-commerce giant’s leadership would be so bold and reckless as to boost its numbers for short-term upside.

At the end of the day, these risks seem rather minor compared to Alibaba’s extraordinary growth potential in a variety of different businesses, attractive valuation and ambitious agenda. After all, Jack Ma has been an extraordinary shepherd of shareholder value so far, and he would go down in history as a better conman than Bernie Madoff if Alibaba’s numbers were fudged.

[See: 7 of the Best Tech Stocks to Buy for 2018.]

Whether you’re buying stocks to beat the market in 2018 or you have a longer-term perspective, Alibaba shares, at today’s prices, are well worth considering.

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Why Alibaba Group Holding Ltd (BABA) Is One of the Best Stocks to Buy for 2018 originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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