U.S.-China tensions mount, but traders say this Chinese stock has potential

Chinese internet stocks were rallying again Tuesday.

The KWEB China internet ETF, which holds stocks such as JD.com and Alibaba, was up more than 1% by the middle of the session and added to a more than 4% gain over the past two days. The ETF was boosted by a better-than-expected quarter for JD.com a day earlier.

Mark Tepper, president of Strategic Wealth Partners, expects more gains for the group even as U.S.-China tensions ratchet higher.

"What investors need to do is just tune out the noise related to some of these tensions and focus more on the underlying fundamentals of the companies," Tepper told CNBC's "Trading Nation" on Monday. "Think about where you want to be in U.S. stocks — Facebook, Google, Amazon, Microsoft, Apple — all those internet names, you want to be in the same space in China."

Tepper highlights e-commerce company Alibaba specifically as a solid way to play the Chinese tech space.

"That's our play on the growing middle class in China. Basically you're getting all the businesses that Amazon has at a discount. You're getting e-commerce, cloud, AliPay, delivery. They're growing even faster than Amazon in a place with four times as many people with a slightly more attractive multiple," said Tepper.

Alibaba is set to report earnings on Thursday. The stock was on watch after President Donald Trump over the weekend threatened to ban the company in the U.S. Tepper says the risk of any action against Alibaba such as delisting the stock from U.S. exchanges does not look to be feasible. 

Bill Baruch, founder of Blue Line Capital, says Alibaba recently broke out above a rising trend line that should take the stock as high as $290.

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"Then you have a backstop of support, really big support down at $230 so you could really trade that name looking at those two support levels to manage your risk," Baruch said during the same "Trading Nation" segment.

Alibaba shares were trading above $259 on the New York Stock Exchange early Tuesday afternoon.

Disclosure: Strategic Wealth Partners holds KWEB and BABA. 

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