JD.com: Even If It Stops Growing, It Still Is A Fundamental Buy

Luis Rios19 FollowersFollow5ShareSavePlay(15min)CommentsSummaryJD.com is fundamentally undervalued, with a 31% margin of safety based on NAV and EPV analysis.Despite lacking a durable economic moat, JD's asset base and earnings power are underappreciated by the market.I rate JD a buy, targeting an intrinsic value of $42.36 per share, implying a potential 45% return.Risks include political instability, management capital allocation, and the possibility that value realization may be delayed or never materialize.XiXinXing/iStock Editorial via Getty Images Investment Thesis It's often heard nowadays that inefficiencies are more often found outside the US, and this time, I believe this seems to be proven right. JD.com (JD) is one of the biggest andThis article was written byLuis Rios19 FollowersFollowWorked in the finance and operational departments in the construction industry for 5 years. With a desire to become an equity research analyst and start my investing journey, I decided to leave the construction industry and go back to my roots in finance. Became a sector-focused analyst specializing in real estate, infrastructure, and materials — combining direct industry experience with formal training in value investing. My goal is to bring a different valuation approach, based on economic realities, and not flawed and meaningless assumptions, that are needed under more popular valuation methods, in order to help investors gauge true intrinsic value. I differ from most industry analysts by first assessing the economic viability of the businesses, and after determining the kind of business we are dealing with, I apply a proper valuation method, based on the reproduction or liquidation cost of the assets, the earnings power value, and if the business possess a solid competitive advantage, an estimation of the return that can be earned by buying a growth stock at any given market price. By incorporating my different approach to valuing stocks with my experience in construction, I plan to conduct and publish research on public equities across diverse industries.Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Short position through short-selling of the stock, or purchase of put options or similar derivatives in JD over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. This valuation process follows the value investing principles and procedures of Professor Bruce Greenwald.Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.