10 Best Internet Retail Stocks to Buy Now

3. PDD Holdings Inc. (NASDAQ:PDD)

Number of Hedge Fund Holders: 86

PDD Holdings Inc. (NASDAQ:PDD) is another leading e-commerce company that ranks as the 3rd best internet retail stock to buy now. It is renowned for its marketplace platforms called Pinduoduo and Temu. The company has developed a network of sellers, logistics, and other capabilities in just a decade since its establishment and is now competing with other e-commerce giants in the industry.

The competitive edge of the company comes from its business models that encompasses focusing on small and medium businesses. This model makes the product listings of the company to be comparatively cheaper than its competitors thereby attracting more customers. In the second quarter of fiscal 2024, management announced that it has reached more than 167 million monthly active customers and that around 50 million customers are based in the United States.

The company has been doing well financially. PDD Holdings Inc. (NASDAQ:PDD) second quarter of fiscal 2024 revenue came in at $13.74 billion indicating an 86% growth year-over-year. The company has also developed an efficient operating model which enabled it to improve its operating profit by 156% year-over-year. The stock was held by 86 hedge funds in Q2 2024 as per Insider Monkey’s database.

Hayden Capital stated the following regarding PDD Holdings Inc. (NASDAQ:PDD) in its Q2 2024 investor letter:

“PDD Holdings Inc. (NASDAQ:PDD): A few weeks ago, Latepost (a leading Chinese technology news outlet) confirmed Pinduoduo’s online grocery initiative is solidly profitable (LINK). According to the article, Duoduo Grocery is able to achieve ~5% net profit margins in competitive markets (where they go up against Meituan Select). In non-competitive markets, they can achieve ~10 – 15% net margins.

The company doesn’t disclose the exact scale of Duoduo Grocery, but our calculations indicate it’s likely around ~RMB 300BN this year, and still growing in the double-digits. At that level, the division is likely contributing ~US $2.5BN in annual profits.

It’s an impressive result, but admittedly, not a huge needle-mover in light of the total $17.6BN net profits the company is expected to make this year (~14% of overall profits)…” (Click here to read the full text)