• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Stocks

Top 5 Asian Consumer Stocks for 2021

Watch these five companies to play the enormous growth in Asian economies, as the world powers back on in 2021.
By ALEX FREW MCMILLAN
Dec 14, 2020 | 02:27 PM EST
Stocks quotes in this article: JD, BABA, AMZN, PDD, SNE, MSFT, MLCO

This week, I'm highlighting five Asia stocks to watch in 2021 in each of my Real Money columns, Monday, Wednesday and Friday.

I'm grouping them by theme. So let's kick it off with the Asian economic recovery story, and five consumer-driven stocks set to gain as Asian economies recover.

JD.com

The second-largest e-commerce site in China, JD.com (JD) gets far less attention than its big brother, Alibaba Group Holding (BABA) . But JD.com is posting faster growth, and weathered the coronavirus outbreak in China particularly well since it has its own distribution network, while other e-commerce companies suffered delivery chaos. That will have bolstered perception of its brand. It also increasingly provides logistics for third parties.

"Single's Day," as the November 11 shopping bonanza in China is known, has evolved into a multi-day event. JD.com reported sales of C¥271.5 billion (US$38.3 billion) for its 11-day sale from November 1-11. That growth, at 33%, was faster than Alibaba's 26% gain, although the BABA's total at C¥498.2 billion (US$70.2 billion) still leaves no doubt as to who is top dog. Amazon.com (AMZN) was happy sales for Black Friday weekend rose 60% to US$4.8 billion.

JD.com is experiencing fast growth in fast-moving consumer goods, and gaining market share in electronics. Beware the expensive valuation, at 29 times earnings, but those earnings are also rising fast; gross profit up 29.0% in the first nine months of 2020. The stock has risen 134% in 2020 so far, and has quadrupled since late 2018.

Pinduoduo

Pinduoduo (PDD) is an e-commerce platform that specializes in serving smaller Chinese cities, a market left underpenetrated by Alibaba and JD.com. The site offers "community group purchase" bonuses that encourage consumers to cluster purchases together and get better deals. That tactic proves popular with older buyers, with 70% of such purchases made by people over the age of 33.

The pandemic has caused a change in behavior in China, where folks of all ages and walks of life are now shopping online. For the first 10 months of the year, consumer-goods sales in general fell 5.9% year on year. Online consumer-goods sales rose 10.9%. Some shoppers are returning to traditional retail, but there are plenty of converts to e-commerce. The company has yet to turn a profit but getting close.

Pinduoduo is still experiencing strong growth in user numbers, as it penetrates the Chinese hinterland. Active buyers rose 36.4% year on year in the third quarter to 731.3 million people, while total revenue rose 89.1%.

Engagement in terms of time spent on the site has grown during the pandemic. Its Duo Duo Maicai service is a next-day pickup feature for groceries at cheaper prices, with online grocery expected to rise from 20% market share now to close to 50% by 2025.

The stock was added to the MSCI Asia ex-Japan index last year, giving it a beta-buying boost from index trackers. Shares are up 290.4% year to date.

Shiseido

Japanese cosmetics giant Shiseido (T:4911) (SSDOY) provides a value play on consumer-goods recovery, with a China growth kicker. Shiseido's many brands led by Shiseido itself are very popular with Chinese shoppers, and were some of the hottest sellers on Single's Day. Chinese cosmetic sales plunged in the first quarter in China, as the Covid-19 outbreak blossomed, but recovered starting in April, with double-digit growth in most months since.

The company has six stores for its brands (Shiseido, CPB, NARS, Elixir, Ipsa, Anessa) in Hainan Island, the "Hawaii of China," set to gain as Chinese travelers embark on domestic trips in face of travel restrictions. Hainan has positioned itself as a duty-free sales destination, with the annual tax-free limit per person raised from C¥30,000 to C¥100,000 as of July 1, and tax-free purchases now allowed on a special online platform once shoppers return home. Jefferies equities analyst Mitsuko Miyasako says in a report that "Shiseido's strength in the Chinese market shines through."

Nintendo

Nintendo (NTDOY) is a Japanese shinise, or "old shop," the name given to companies that are at least a century old. Although it's known for videogames and consoles, it started out in the Japanese cultural capital of Kyoto in 1889 making handmade hanafuda, flower-theme Japanese playing cards.

I'm biased on this one. I've spent far too many hours playing The Legend of Zelda: Breath of the Wild during lockdown. The game explores a gloriously expansive open world, with players allowed to pick their way through it, bashing monsters and building up sets of armor, embarking on quests, or not playing the main game at all and simply collecting recipes to do some cooking, or taming wild horses to ride around.

There's a sequel for Zelda expected next year. This should be a huge seller for Nintendo -- even though it was rolled out in 2017, Zelda still sold 21 million copies in the last two years. Mario Kart 8 Deluxe, with 36 million copies sold in the last two years, and Animal Crossing: New Horizons, with 34 million copies sold since introduction in March 2020, are its current best sellers.

There's plenty of speculation that Nintendo will also release a new version of its Switch console, variously described as the Switch Pro or Switch 2. The Switch is lower-powered than the newly introduced Sony (SNE) PlayStation 5 and Microsoft (MSFT) Xbox X. But it has the huge advantage of a portable screen, harking back to its earlier hardware such as the Game Boy. Sony shares (up 32.2% year to date) are equally attractive as Nintendo (up 41.5%), though Nintendo is a purer play on videogames.

Melco Resorts & Entertainment

A recovery in the take at the gambling tables in the world's largest casino center, Macau, would be the ultimate Covid recovery story. Arguably no business was harder hit by the coronavirus than Macau's casinos.

The casinos were totally shuttered for 15 days, but even after they reopened international visitors were barred from entering. Chinese citizens (71% of visitors to Macau) had to do two weeks of quarantine on return, putting paid to a short gambling spree, while visitors from Hong Kong (18.7%) were barred along with nationals of all other nations.

The city only has a population of 615,000, so there's essentially no domestic market. Around three-quarters of the workforce in Macau work in some connection with the city's 41 casinos. Companies such as Melco Resorts & Entertainment (MLCO) , Sands China (SCHYY), Wynn Macau (WYNMY), MGM China (MCHVY) and Galaxy Entertainment Group (GXYYY) reported basically no revenue for the second quiarer as a result.

Melco and Galaxy are the two Hong Kong-grown casino operators, likely to experience marginally less political pressure than their Las Vegas-linked counterparts. Melco in 2018 unveiled the fifth hotel tower, the Zaha Hadid Architects-designed Morpheus, at the enormous City of Dreams complex, which already contains the Grand Hyatt and Hard Rock Hotel, and also runs the Hollywood-themed Studio City resort. The company says it only needs to hit gross gaming revenue of mid-to-high 20% of its historical rate to get back to break even.

"Casino hopping" is down after the virus hit, with punters more likely to play where they stay. Melco is doing a good job targeting "premium mass" patrons and attracting visitors from inside China but beyond the borders of Guangdong Province, across the Macau border.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, McMillan had no positions in any securities mentioned.

TAGS: Investing | Markets | Stocks | Trading | Asia | China | Japan

More from Stocks

Is Bristol-Myers Squibb Finally Ready for a Breakout?

Bruce Kamich
Apr 19, 2021 10:19 AM EDT

Prices have rallied from early March and are in a position to test their January highs.

One Key Market Index Refuses to Join the Party

Guy Ortmann
Apr 19, 2021 10:04 AM EDT

As more new closing highs are registered, one index is still not in an uptrend.

2 Health-Related Stocks See Bits of Insider Interest

Bret Jensen
Apr 19, 2021 10:00 AM EDT

Large purchases of Cortexyme Inc. and NantHealth Inc. shares have been made by insiders recently.

Metromile Could Bounce but Needs to Develop a Base for a Sustained Advance

Bruce Kamich
Apr 19, 2021 9:07 AM EDT

Indications are that sellers of the auto insurance provider's shares have been more aggressive of late.

Watch for the Possible Resumption of the Rally in Marathon Digital

Carolyn Boroden
Apr 19, 2021 8:30 AM EDT

I'm looking for a buy 'trigger' against the support and timing.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 08:05 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    How recency bias and the Pareto Principle impact y...
  • 02:42 PM EDT PAUL PRICE

    Wednesday on Real Money Pro

    Make this stock a 'part' of your portfolio.
  • 04:44 PM EDT PAUL PRICE

    Pretty Incredible + Hard to Believe

  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login