Is BABA a good buy right now?

$Alibaba (BABA.US)$ Hey there guys, I just started analyzing stocks more and I thought I´ll try to do that and post it here. That´s my first analysis for BABA. If you have any feedback for me that would be great and highly appreciated. If you have questions feel free to ask, I´ll try to answer everything.

Today we will look through the basics of Alibaba´s business and then see if we can come up with a fair value for BABA´s stock using discounted free cashflow.

This is not financial advice and I do not own shares in BABA. Nevertheless I will try to stay as unbiased and objective as I can. Always do your own due diligence.

First let´s review their different revenue streams. Their biggest stream, around 84% of their sales comes from Commerce. Another 10% comes from Cloud Computing. Digital Marketing and Entertainment makes up for 5% and the remaining 1% are Innovation initiatives and Others.

For the valuation:
We take analyst estimates, we discount that by our required return of 7,9%. Then we use the perpetual growth rate of 2,5% and that gave us a fair value for BABA´s stock of $195 per share. But because we have to account for BABA´s equity as well, our fair value of equity would be $207 per share.

With BABA´s price being at $125 per share right now, it seems undervalued. That´s why I think buying heavily might be a good idea. Although you can always dollar-cost-average. That´s where you invest every month the same amount.

Where I see BABA´s stock price in 5 years. We can calculate where the price might be in 5 years with the Earnings Per Share (EPS TTM), the Estimated Growth Rate and the Future P/E Value. With this method I get a stock price of $267 per share which is higher than what it is now.

What I´ll do. I believe BABA is here to stay. I think they will stay for a long time. That´s why I will start buying as soon as I get the chance to do so.

Thank you for reading and I hope I´ll see you again.