Alibaba Group Holding Limited (BABA) Stock Is Gearing Up For A Significant Breakout

The price of Alibaba Group Holding Limited (NYSE:BABA) stock ended December 20, 2019 trading at $212.25 which saw downtrend of 54.85% since the beginning of 2019. For most investors, the 1.01% rally in the share price could have prompted them to buy the stock, but doing that would be a mistake as it would be taking into consideration only the short-term performance of the stock.

A look at the BABA stock today shows that it has gained 57.09% of its value over the past one year, which has led to some investors becoming excited about the short-term performance of Alibaba Group Holding Limited (NYSE:BABA). If we turn to the stock analysts in general, they revealed that most of them are still bullish about the chances of the shares. The consensus rating from analysts for Alibaba Group Holding Limited (BABA) is 1.6 which is a buy rating. Over the past week, the stock has been rated as a Buy 15 times while it has been rated as a Hold 1 times. The 52-week high price for BABA is $211.37 which is attained on December 20 while its 52-week low currently stands at $129.77 and was reached on December 24. At the moment, the stock is trading $38.05 above its YTD moving average set at $174.2.

Moving on, Alibaba Group Holding Limited (BABA) last released its earnings for the September 2019 quarter of the fiscal year. The company performed decently over the past three months, with its earnings up 32% year-over-year at $1.49. The company brought a surprise of 25 as analysts were predicting $1.19 per share. The revenue generated by Alibaba Group Holding Limited in the September 2019 quarter surged by 34% to reach $16.65 billion. This is high compared to the $12.4 billion it recorded in the same quarter last year. To see what traders should watch in its December 2019 financial results, analysts have consensus earnings per share of $1.85 which is higher than the $1.39 recorded in the same quarter a year ago. Over the next 12 months, the earnings per share are expected to move by 22.87%. If it achieves that, then the company firmly believes that its long-term annual earnings growth rate target set at 3.7 % could be achieved. The company has also recorded a revenue of $63.44 billion over the past 12 months.

In order to determine if the stock is worthy of your patience, you should know that Alibaba Group Holding Limited (NYSE:BABA) is now trading at 25.62X the earnings per share recorded over the past 12 months. This is a downtrend compared to the readings of the sector which is 29.68X while the industry average stands at 25.48X. The most popular way to value a stock is to look at its historic Price-to-Earnings (P/E) ratio with the help of its earnings report over the past 12 months. Alibaba Group Holding Limited was able to achieve an EPS of $8.28 during the last four quarters. The P/E ratio is widely known due to the fact that it is widely used, simple, effective, and, tautologically.

On Friday, December 20 of 2019, the 14-day Absolute ATR (Average True Range) for BABA moved by $3.74. Over the past seven days, the stock’s average daily volatility stood at 1.22%. A stock with a low volatility is usually a good one as it means that investors are very confident in the stock. Alibaba Group Holding Limited’s trading volume has recently moved to 25.02 million, which is compared with the average daily volume of 15.89 million shares.

The daily chart for BABA, points out that the company has recorded 26.26% gains over the past six months. However, it is still 63.56% higher than its most recent low trading price. The performance of the stock over the past five days shows that it is up 3.58% though it is 6.31% above its three-week moving average. It is worthy to know that price action is not always clear. There are times when a stock will undergo some negatives, trade erratically within some range or even act very unpredictable. When that happens, then making use of moving averages makes the pattern clearer for traders. Comparing to 50-day SMA, the price of the stock has surged by 13.57% while it is up 20.4% against the 200-day SMA. This is usually seen as the last support line for a stock, as a move downward could signal a bearish trend or market. The daily chart of BABA reveals that it has gained some grounds as it ended Friday with a 16.4% rise over the past 30 days.