$TENCENT(00700)$ ’s stock is currently trading at a reasonable level, with a price-to-earnings ratio of about 18-20x. There’s potential for earnings growth of 10%-15% in the future, and with Tencent’s strong capital allocation abilities (buybacks + dividends), I believe an average return of 15% per year over the next 3-5 years is definitely achievable.
If the stock drops in the short term, buybacks could help boost long-term returns. On the flip side, if the stock surges too much and reduces future returns, it’s a good idea to reduce exposure. In short, Tencent is the kind of stock you can hold with confidence and a solid long-term investment where you can sleep well at night.
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