Investors are always looking for the next Amazon. Is Alibaba ready to dethrone the e-commerce king?

Alibaba Group Holding Ltd. (Nasdaq: BABA) is China’s largest company by market cap of $725 billion. It’s one of the few non-U.S. companies that could join the trillion-dollar market cap club. This is a large-cap tech stock in a market that has favored large-cap tech stocks.

We’ll take a look at how Alibaba’s stock rating stacks up against (Nasdaq: AMZN) and other tech darlings in a moment. But first, let’s break down Alibaba’s future.

It’s hard to know what the world economy will look like a year from now. But it’s safe to assume that Alibaba’s businesses will make up a larger percentage of it.

Alibaba is hard to define because it has multiple businesses, some of which have no real U.S. equivalent.

Its core site is a wholesale marketplace for importers and exporters. But its Tmall site is a little more like Amazon’s Marketplace, serving as a selling platform for major brands and retailers.

And Alibaba Cloud is similar to Amazon Web Services. It’s China’s largest cloud services provider, and one of the largest in the world.

It’s an eclectic mix of businesses, but one that is critical to the functioning of the modern economy.

These businesses were booming pre-COVID. They’ve continued booming throughout the pandemic, and they will likely enjoy a long runway of growth long after 2020 is a distant memory.

Let’s see how Alibaba stacks up using Adam O’Dell’s Green Zone Ratings system.

Alibaba’s Stock Rating Breakdown

Overall, Alibaba’s stock rating is a 66, which is low considering this is a growing large-cap tech stock. So what’s bringing the stock down compared to some of its competition?

Alibaba stock rating

  • Momentum — Alibaba stock rates high on momentum, scoring a 91. This isn’t surprising given that it is a large-cap tech stock. High momentum is a major plus in Adam’s system.
  • Volatility — For a high-momentum foreign stock, Alibaba doesn’t exhibit a lot of big price swings. It rates 88 in volatility, meaning that only 12% of the stocks in the Green Zone universe are less volatile.
  • Quality — Like most of the large-cap tech giants, Alibaba stock rates high on quality, scoring an 82. The company has high returns on equity, assets and investments. It has low debt and high margins. It doesn’t rate on the same level as some of its American peers, but it’s still a quality business.
  • Growth — Alibaba’s growth rate is also respectable, though not remarkable, at 74. This is still a solid number. It’s just not wildly compelling among Big Tech today.
  • Value — This is a huge tech stock, and that means BABA rates poorly on value, coming in at 9. We’re paying a pretty penny for growth and quality.
  • Size — Alibaba is also enormous. As I mentioned earlier, it’s the Chinese stock most likely to hit a trillion-dollar market cap. BABA’s size rating of 0.6 brought the overall rating down a lot. Historically, small stocks tend to outperform their larger peers.

The takeaway: Alibaba is a fantastic company. BABA’s global presence should grow over the coming years, the U.S.-China trade war notwithstanding.

But with a composite rating of just 66, we should wait before making a major purchase.

Alibaba might be a great addition on a dip, but it’s not priced to outperform the market at current levels.

Money & Markets contributor Charles Sizemore specializes in income and retirement topics. Charles is a regular on The Bull & The Bear podcast. He is also a frequent guest on CNBC, Bloomberg and Fox Business.

Follow Charles on Twitter @CharlesSizemore.