We recently compiled a list of the 10 Chinese Penny Stocks to Buy According to Analysts. In this article, we are going to take a look at where Waterdrop Inc. (NYSE:WDH) stands against other Chinese penny stocks to buy according to analysts.
The announcement of the Chinese stimulus has somewhat created interest among investors and market pundits. China’s local market reacted positively after the government announced that it would apply a ‘moderately loose’ strategy for monetary policy in 2025. This will be China’s first major shift in economic policy since 2011. The Chinese government could take a more proactive approach to fiscal policy to stabilize property and stock markets.
China's president, Xi Jinping, has assured that the country will remain the world’s ‘growth engine’ and meet its GDP growth target of 5% in 2024. The Chinese government has taken bold steps to support its economy. Moreover, the stimulus has come at a time when the economy is struggling badly and there are potential tariff threats from the new U.S. administration. Despite that, China has been facing lower imports and exports, which greatly threatens the economy against Trump’s tariffs.
The outbound shipments saw a 6.7% growth in November, missing estimates by 8.5% and down from a 12.7% growth in October 2024. On top of that, the imports declined 3.9% in November, the worst performance for imports in nine months, as reported by Reuters.
China’s stimulus of $1.5 trillion, or nearly 10 billion yuan, to support its economy has given some hope. Further loosening the policy would support small businesses. However, for investors to be attracted to the Chinese stock market, something positive needs to happen, especially how the economy reacts to the policy during the first half of 2025.
“The actual delivery has disappointed high hopes several times already over the past two years. We are back to the tricky stage of waiting for actual numbers to see whether it lives up to expectations,” said Xin-Yao Ng, investment director on the Asian equities team at abrdn.
The Hang Seng Index has plunged over 3% over the last five days, as of December 17, while the CSI 300 index has dropped by nearly 1.50% in the last five days but it is up by almost 16% year to date. We can see the market's mixed reaction to the recent events.
A financial analyst presenting a chart of insurance solutions to a boardroom.
Our Methodology
To compile our list of the 10 Chinese penny stocks to buy according to analysts, we used a Finviz screener to list down all Chinese penny stocks under $5. We then picked the 10 stocks with the highest upside (over 25%) according to analysts, as of December 17. The list is ranked in ascending order of analysts' estimated upside.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Waterdrop Inc. (NYSE:WDH) is a leading technology company mainly engaged in running an independent third-party insurance platform focused on insurance and healthcare services. Waterdrop’s primary business operations include the insurance marketplace, medical crowdfunding, and mutual aid.
Waterdrop Inc. (NYSE:WDH) continues to improve its insurance and crowdfunding business. During the third quarter of 2024, the company’s insurance business first-year premiums (FYP) increased by nearly 15% quarter-over-quarter and maintained an operating profit margin above 20%. Even though the company’s insurance-related income declined by 2% year-over-year, WDH’s net profit attributable to ordinary shareholders soared by nearly 153% from a year ago.
In Q3 2024, the company’s growth was mainly driven by user acquisition and innovative tailor-made products. Furthermore, the company’s AI consultant has recorded notable progress, with the ability to generate over 1 million yuan in monthly premiums by serving user inquiries. The company’s crowdfunding coverage is another key segment and during Q3, over 466 million people used Waterdrop Medical Crowdfunding to donate an aggregate of RMB 66.3 billion to 3.32 million patients.
Waterdrop Inc.’s (NYSE:WDH) growth has helped in improving its cash position. By the end of Q3 2024, the company had RMB 3.44 billion, which includes cash and cash equivalents, short-term investments, and long-term debt investments.
Overall, WDH ranks 6th on our list of Chinese penny stocks to buy according to analysts. While we acknowledge the potential of WDH to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than WDH but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
