| Are Chinese Stocks a Buy on Weakness? 
Louis Navellier | Chinese stocks have certainly had a tough go of it recently. The trouble started last week after The Wall Street Journal pointed out that there are “fresh concerns” about Chinese stocks being delisted from U.S. stock exchanges. But the reality is this is a bogus rumor that is being fueled by the fact that the SEC announced on Wednesday that they are starting to implement a law that requires accounting firms to allow audits of overseas companies. Specifically, the SEC is proceeding to implement the Holding Foreign Companies Accountable Act that will effectively allow a co-audit by U.S. accounting firms. Chinese stocks were dealt a second blow yesterday after U.S. hedge fund Archegos Capital took on substantial losses following margin call trades going awry. The hedge fund was forced to liquidate about $30 billion worth of stock. Unfortunately, Chinese stocks were among many of the stocks Archegos Capital was forced to unwind. The news also hurt financials Nomura Holdings, Inc. (NMR) and Credit Suisse Group AG (CS), with both stocks sliding more than 10% lower after they announced that the selling could have a “significant” negative impact on their first-quarter earnings results. Personally, I’m not concerned about the financials, as I don’t recommend a single one in Platinum Growth Club. Long-time readers know that I am an ex-banking analyst. I previously worked for a division of the government that is now part of the Federal Reserve. Seeing how they essentially “cook their books” scarred me for life. After that experience, you couldn’t get me to touch a bank with a 10-foot pole! Something you’ll notice with banks is their “creative accounting” practices. Based on my time as an analyst, I frankly do not trust the accounting in that sector. And that was even before the 2008 financial crisis – and before Wells Fargo (WFC) crossed the line from creative to fraudulent by secretly saddling customers with extra, unauthorized accounts to juice their sales numbers (as it turned out in their 2016 scandal). The truth of the matter is that financials have a history of shady accounting, and I’m not interested in companies that can hide loan problems on their books. Check the Numbers First I do, however, like some Chinese stocks, but only those that are fundamentally sound. I personally check the GAAP accounting of each Chinese company that I recommend in all my services to ensure that their accounting complies with our U.S. standards. So, as far as the Chinese stocks I recommend are concerned, I foresee virtually no problem with these “co-audits,” since the Chinese stocks on my Model Portfolio have always had clean GAAP accounting. The rumblings that Alibaba Group Holding Limited (BABA) and other major Chinese companies may delist from U.S. exchanges is totally unfounded. There are, of course, “bad” Chinese stocks, which is why it’s critical that the numbers check out before you invest. Take Luckin Coffee Inc. (LKNCY), once considered a major Starbucks Corporation (SBUX) competitor, for example. The company was listed on the NASDAQ stock exchange in May 2019. However, Luckin Coffee was delisted from the NASDAQ in June 2020 following a stunning scandal. During an internal investigation, the company disclosed that its chief operating officer had lied about its sales in 2019. From April 2019 through January 2020, the company had reported net sales of 2.9 billion yuan, or $413 million. However, 2.12 billion yuan, or $300 million, of those sales had been fabricated. The stock plummeted more than 80% on April 2, 2020, following the announcement of the investigation’s findings. The bottom line: Fundamentals are important. And by investing strictly in fundamentally superior Chinese stocks, I fully expect all of my Platinum Growth Club Model Portfolio Chinese stocks to pass the SEC’s audit and come roaring back as they release their first-quarter results. But it’s not just my Chinese stocks that I expect to rally during the first-quarter earnings announcement season. The reality is we’re on the verge of a truly spectacular first-quarter earnings announcement season: Factset is projecting that S&P 500 companies will achieve first-quarter earnings growth of 23.3% and sales growth of 6.3%. And my Platinum Growth Club Model Portfolio stocks are perfectly positioned to benefit. I have more than 100 stocks across all of my services, and each and every one boasts strong earnings and sales growth. So, I fully anticipate my stocks to post wave-after-wave of position earnings results, which, in turn, should drop kick and drive my stocks higher. It’s why now is a great time to join Platinum Growth Club so your portfolio is “locked and loaded” for what should be a stunning earnings season. Of course, you don’t have to invest in all 100+ stocks. If you’d rather start small, I’ve got you covered there, too. My Platinum Growth Club service comes with my exclusive Model Portfolio. I handpick all of my Model Portfolio recommendations from my different stock services – Growth Investor, Breakthrough Stocks and Accelerated Profits – so you can rest assured that you’re always invested in the crème de la crème. And the proof is in the pudding. 43 out of my 55 Platinum Growth Club stocks are positive on the Model Portfolio, with 35 of those 55 fundamentally superior stocks currently sitting on double- and triple-digit gains as of this writing. If you’re interested in joining, click here for full details. Sincerely, 
Louis Navellier
The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below: Alibaba Group Holding Limited (BABA) | 
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