Thesis Vale S.A.'s (NYSE:VALE) stock has outperformed the S&P 500 (SPX) (SP500) significantly since our previous update in early October. Accordingly, VALE posted a price gain of nearly 22% relative to SPX's 11% uptick. The outperformance likely stunned the bears, considering that Wall Street analysts turned even more pessimistic after its FQ3 earnings release in late October. It also coincided with the initial aftermath of China's CPC 20th Party Congress in which Chinese President Xi Jinping doubled down on his "dynamic COVID zero" policy. Therefore, even Vale's management was likely taken by surprise as it highlighted its disappointment in its earnings call commentary. However, in just over a month, China has progressively eased its zero COVID restrictions, with major provincial capital cities accelerating their loosening of curbs. As such, China watchers have revised their reopening forecasts, with the consensus suggesting that China could exit its zero COVID restrictions by Q2'23. Hence, the recent outperformance of VALE shouldn't be surprising. Notably, VALE bottomed out in September, well ahead of China's recent easing moves. Thus, buyers already returned nearly three months ago to start accumulating. However, the decisive moves to demolish the bears only started in November, as VALE bulls forced a series of upward surges, lifting its performance sharply. Given VALE's recent recovery, we assessed its valuation as more well-balanced. However, its price action is also overbought and, in our opinion, has likely overstated the recovery in iron ore futures (TIOC:COM). As such, we believe investors looking to add exposure should remain patient and wait for a pullback first to digest its recent recovery. Revising from Buy to Hold for now. VALE: Easy Money Has Likely Been Made With the remarkable recovery from its September lows, VALE's NTM EBITDA multiples have normalized toward its 10Y average. Notwithstanding, the significant revisions in its NTM earnings estimates by Street analysts after its Q3 card also lifted its valuation. As such, it corroborates our previous article explaining why the market didn't re-rate VALE higher earlier in the year. The market had correctly anticipated that the Street could be "forced" to cut its earnings estimates, given worsening macros and elevated inflation levels and energy costs. While we think the downward revisions should place Vale in a better position to outperform the Street's consensus moving ahead, we deduce the reward/risk balance is less favorable at the current levels. Despite that, we believe Street analysts have likely not reflected the boost to China's property market recovery and its 2023/24 GDP forecasts as China eases its COVID restrictions. While iron ore futures have surged from their November lows, reflecting the optimism in China's recent easing moves, they remain well below their April and August highs. Therefore, we believe there's significant potential for TIOC to sustain its recovery if China could reopen with more urgency, lifting its GDP growth projections for 2023. Notably, Chinese economists have called out to policymakers to accelerate China's reopening and set a GDP growth target higher than 5% for 2023 "to send a strong signal that boosting [the] economy is a priority for the government." Accordingly, it's higher than the revised growth projections per consensus right after the National Congress, as economists dwelled over China's zero COVID restrictions. As such, we believe China could provide a significant boost for VALE in the near medium term if the market anticipates an accelerated reopening phase. VALE has recovered remarkably from its September lows but remains a distance from its May highs. However, we assess that a material re-rating toward its May highs is unlikely for now, as the market remains tentative over worsening global macro headwinds. Also, we believe that the near-term optimism over China's recent easing of its COVID curbs has likely been reflected. As such, we believe a pullback is looking increasingly likely, which should help improve investors' reward/risk as they look to partake in China's economic recovery moving ahead. Revising from Buy to Hold for now. Do you want to buy only at the right entry points for your growth stocks? We help you to pick lower-risk entry points, ensuring you are able to capitalize on them with a higher probability of success and profit on their next wave up. Your membership also includes: 24/7 access to our model portfolios Daily Tactical Market Analysis to sharpen your market awareness and avoid the emotional rollercoaster Access to all our top stocks and earnings ideas Access to all our charts with specific entry points Real-time chatroom support Real-time buy/sell/hedge alerts Sign up now for a Risk-Free 14-Day free trial! This article was written by I'm JR, the lead writer and founder of JR Research and Ultimate Growth Investing Marketplace service. Our team is committed to bringing more clarity to investors in their investment decisions. Our marketplace service focuses on a price-action-based approach to growth and technology stocks, supported by fundamental analysis. In addition, our general SA site discusses stocks from various sectors and industries. Our discussion mainly focuses on a short- to medium-term thesis. While we hold stocks for the long-term, we also use appropriate opportunities to benefit from short- to medium-term swings, leveraging long (directionally bullish) or short (directionally bearish) set-ups. My LinkedIn: www.linkedin.com/in/seekjo Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.