Senior Vice President Paul Attwood of Huntington Asset Advisors believes Vipshop Holdings Ltd – ADR (VIPS), an online retailer providing products to customers in China, is taking advantage of China’s move toward a consumer-driven economy.
“The company is engaged in online product sales and distribution, which include numerous products like accessories, cosmetics and home goods. This is an example of an investment that takes advantage of what’s happening in the Chinese economy, namely the move toward a more consumer-driven and less industrial-driven economy. That’s a big long-term positive in our view,” Attwood says.
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Attwood says the shift can be seen in Vipshop’s sales and earnings growth, as the top line grew by 86% in 2014, with earnings increasing by 74%.
“Earnings estimates for 2015 are rising as the company improves average selling prices and increases its subscriber base. The company has a relatively high price to earnings multiple; however, when compared to the phenomenal growth rates we expect, the stock is very attractive,” Attwood says.
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