In this article, we will discuss the 10 Wonderful Stocks to Buy Now at a Fair Price.
In H2 of the year so far, there are signs that the S&P 500 index has been broadening beyond technology leadership and the index is reverting to a more normalized state. This means that there are several high-quality stocks outside of the popular names and investors are required to be diversified. This diversification should not be limited to the style level, but also to the stock level. Market experts opine that the AI theme has largely fuelled the narrow market. This concentration, along with an increase in passive investments, resulted in a significant cycle of consensus positioning and stretched valuations. This led to the vulnerability in the market, which resulted in a sharp correction in July and early August.
As per Fidelity International, when it comes to passive investing in the S&P 500, it demonstrates nearly a third of holdings in only 7 stocks. Considering their dominance, a stumble in performance means the index will see a significant impact, and the investors have already seen some mega-cap technology names that are unable to deliver on strong expectations.
S&P 500 Index – Transition and Concentration
The US equities saw an outstanding performance in H1 2024, with the S&P 500 Index rising 15.3%, as per ClearBridge Investments (A Franklin Templeton Company). The investment firm believes that solid earnings results and fiscal stimulus mitigated the influence of higher interest rates. However, the headline performance numbers, aided by a ramp-up in mega-cap stocks and, more specifically, semiconductor leadership, eclipsed the recent signs of deterioration below the surface.
Since the Mag 7 stocks have disproportionately driven earnings growth over the previous 2 years, ClearBridge Investments expects a rebound in earnings among small-cap stocks in the upcoming 12– 18 months. The investment firm believes that small-cap companies have seen the impacts of higher rates. In 2023, profits for Russell 2000 companies declined ~12%. This year, they are up ~13.6%, and for 2025, the projections hover at around ~31%. If this happens, there might be a broadening of the market which should provide an opportunity for active managers.
Opportunities Apart from Magnificent Seven
Companies that are unable to meet hefty expectations might see a disproportionate sell-off, and the stocks riding the wave of AI might be significantly exposed considering the amount of capital deployed versus the uncertain future environment. Given such trends, Fidelity International believes it is unsurprising that so far in H2 2024, there have been signs that the S&P 500 is broadening beyond tech leadership, with some non-tech sectors surpassing the broader market.
There are abundant high-quality stocks apart from the popular names. This means that dozens of companies in the S&P 500 continue to offer a return on invested capital (ROIC) and earnings growth of more than 30%. This is true for several other quality metrics, reflecting an underappreciated depth of opportunity in the broader US equities.
While diversification remains critical, even looking beyond the Magnificent Seven might not necessarily offer the required diversification considering that the US market remains heavily weighted towards growth sectors like IT. As per Fidelity International, diversified portfolios need negative correlations between assets, but few styles provide consistent negative correlations to quality growth companies. That being said, cyclical value and defensive value remain 2 key exceptions.
To get a negative correlation, the investors are required to avoid an overlap at the stock level. As of now, the US market provides a range of attractive stock opportunities that offer this valuable diversification.
As per ClearBridge Investments, the top 5 stocks now constitute ~27% of the S&P 500 and the top 10 make up ~37%. As per the investment firm, this concentration might stagnate near current levels, with mega caps delivering solid, but slower, earnings growth in comparison to the recent past. The investment firm expects that diversified portfolios should outperform in the upcoming 12–18 months.
With this in mind, we will now have a look at 10 Wonderful Stocks to Buy Now at a Fair Price.
A financial analyst at his computer monitor, tracking the public company’s investments.
Our methodology
We first sifted through multiple online rankings and ETFs to identify quality stocks with wide moats. Next, we selected stocks that were trading at a forward P/E of less than ~23.65x (since the broader market trades at a forward multiple of ~23.65, as per WSJ). The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q2 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Wonderful Stocks to Buy Now at a Fair Price
10) Novartis AG (NYSE:NVS)
Expected Earnings Growth: 8.3%
Number of Hedge Fund Holders: 30
Forward P/E Multiple (As of September 30): 14.16x
Novartis AG (NYSE:NVS) is engaged in the research, development, manufacture, and marketing of healthcare products in Switzerland and internationally.
Novartis AG (NYSE:NVS)’s wide economic moat revolves around its strong intellectual property aiding its multibillion-dollar products and an abundance of late-pipeline products. As a result of its strong position in multiple key therapeutic areas, Novartis AG (NYSE:NVS) appears to be well-placed for steady long-term cash flows. The company’s solid late-stage pipeline is expected to augment its long-term growth prospects.
Wall Street believes that the company’s products such as Kesimpta, Kisgali, and Cosentyx should aid its revenue and core operating income growth in the upcoming quarters. Moreover, Novartis AG (NYSE: NVS) remains optimistic about its innovative pipeline and capital allocation strategy. While the company continues to expand its portfolio with FDA submissions, it anticipates exceeding the peak sales guidance for Cosentyx, Kesimpta, and Entresto.
The company has been expanding its medicine canalumab in other immunology indications and anticipates protection till the mid to late 2030s. In Q2 2024, Novartis AG (NYSE:NVS) saw its operating income (continuing operations) coming at USD 4.0 billion, reflecting a growth of 47% on a constant currency basis. This growth stemmed from higher net sales and lower impairments, partly offset by increased R&D investments.
For FY 2024, the company expects its net sales to grow by high single to low double-digit, while its core operating income is anticipated to increase by mid-to-high teens. Analysts at The Goldman Sachs Group restated a “Neutral” rating, giving a $121.00 price target on 5th September.
Aristotle Capital Management, LLC, an investment management company, released its second-quarter 2024 investor letter. Here is what the fund said:
“We have been investors in the Swiss pharmaceutical company Novartis AG (NYSE:NVS) for over a decade, having first purchased shares in 2011. During our holding period, the company has undergone significant changes. Vasant (“Vas”) Narasimhan was promoted to CEO in 2018 and, we believe, has positively influenced the company’s culture and helped shift the business more toward innovative medicines. Examples include the sale of Novartis’s consumer (over-the-counter) joint venture; the divestiture of its vaccines and animal health businesses; the spinoff of Alcon, a global leader in the treatment of eye diseases and eye conditions (also an International Equity holding); and most recently, the spinoff of generics manufacturer Sandoz. As part of its portfolio transformation, Novartis has been able to improve its margins and gain share of branded pharmaceuticals. With many catalysts having neared completion, we decided to sell Novartis to fund the purchase of what we believe is a more optimal investment in Roche.”
9) MetLife, Inc. (NYSE:MET)
Expected Earnings Growth: 18.6%
Number of Hedge Fund Holders: 37
Forward P/E Multiple (As of September 30): 8.42x
MetLife, Inc. (NYSE:MET) is a financial services company, which provides insurance, annuities, employee benefits, and asset management services worldwide.
Wall Street analysts believe that MetLife, Inc. (NYSE:MET) enjoys a wide economic moat, stemming from its considerable operating scale, strong brand name, and robust investment capabilities. Furthermore, the company’s strong business diversification by product and market strengthens its economic moat.
Wall Street is optimistic about its new five-year strategic plan, “New Frontier,” with diverse business segments expected to drive recurring cash flow and solid capital and cash positions. “New Frontier” should continue to focus on growth, returns, and consistency. The strong recurring cash flow and a robust capital and cash position should help MetLife, Inc. (NYSE:MET) in delivering shareholder capital returns. That being said, healthy economic growth and real estate fundamentals are expected to act as critical tailwinds.
MetLife, Inc. (NYSE:MET)’s strong performance in Group Benefits and favorable outlook for its PRT business and Asian markets hint at the proactive approach to navigating the broader insurance industry landscape. In Q2 2024, its net investment income and adjusted net investment income came in at $5.2 billion, reflecting a rise of 3% and 2%, respectively on the YoY basis. Growth was aided by increased interest rates and higher variable investment income.
Experts believe that MetLife, Inc. (NYSE:MET)’s growth trajectory should continue largely due to the prospects for sustained earnings growth, which is aided by its Group Benefits business in the US and Mexico and by its growing presence in Asia.
Analysts at Citigroup upped their price objective on the shares of MetLife, Inc. (NYSE:MET) from $83.00 to $89.00, giving a “Buy” rating on 23rd July. As of the second quarter, 37 hedge funds (out of 912 hedge funds tracked by Insider Monkey) owned stakes in the company.
8) General Dynamics Corporation (NYSE:GD)
Expected Earnings Growth: 20.7%
Number of Hedge Fund Holders: 48
Forward P/E Multiple (As of September 30): 18.48x
General Dynamics Corporation (NYSE:GD) operates as an aerospace and defense company worldwide.
Market experts opine that General Dynamics Corporation (NYSE:GD) continues to enjoy a wide economic moat, given its diversified product portfolio and regulatory barriers. Furthermore, the company’s military systems like the M1 Abrams tank and Virginia class nuclear submarines continue to act as long-standing products of the US national defense.
General Dynamics Corporation (NYSE:GD) is expected to see significant growth in cash generation in H2 2024. The company also anticipates a strong Q4, projecting the expiration of accelerated depreciation. It recently highlighted that Gulfstream’s wiring issue with the G700 has largely been resolved, and margin improvement should come in the upcoming quarters. Also, General Dynamics Corporation (NYSE:GD)’s munitions orders are anticipated to rise in the next couple of years, reflecting the current threat environment.
The company is confident about Gulfstream’s higher margins over the long term and strong pipeline of orders. General Dynamics Corporation (NYSE:GD) is aiming for an FCF conversion rate approaching 100% for the current year. In Q2 2024, the company saw revenue of $12 billion, reflecting a rise of 18% as compared to Q2 2023. The operating margin came in at 9.7%, implying a 20-basis point expansion from the year-ago quarter, with strength seen in the Technologies and Combat Systems segments. The company’s business has been focusing on the disciplined execution of its programs, cost, and schedule.
Analysts at Morgan Stanley raised shares of General Dynamics Corporation (NYSE:GD) from an “Equal-weight” rating to an “Overweight” rating. They have increased the price target from $293.00 to $345.00 on 9th August. Notably, 48 hedge funds were long General Dynamics Corporation (NYSE:GD), as per Insider Monkey’s Q2 2024 database of 912 hedge funds.
7) Emerson Electric Co. (NYSE:EMR)
Expected Earnings Growth: 23.4%
Number of Hedge Fund Holders: 51
Forward P/E Multiple (As of September 30): 18.45x
Emerson Electric Co. (NYSE:EMR) is a technology and software company, which provides various solutions for customers in industrial, commercial, and consumer markets.
Emerson Electric Co. (NYSE:EMR) has a wide economic moat, which is mainly based on switching costs, and on brand intangible assets. Moreover, the company’s strong geographic presence and diversified customer base further solidify its moat. Emerson Electric Co. (NYSE:EMR) remains confident in its financial health and strategic initiatives. The company continues to focus on integrating National Instruments and potential share buybacks.
The company expects its backlog to increase YoY as it enters FY 2025. Emerson Electric Co. (NYSE:EMR) has been adjusting its strategy to focus on growth areas like innovation and renewable energy investments while, at the same time, managing softer segments. Therefore, Wall Street analysts are optimistic about the company’s future performance and its strategic positioning in the global automation market.
The company sold its remaining interest in the Copeland joint venture, hinting at the fact that Emerson Electric Co. (NYSE:EMR) is focusing on simplifying its portfolio. It highlighted that demand in process and hybrid markets, which is being led by a constructive capex cycle, has been meeting expectations. In Q3 2024, its operating leverage performance exhibited the benefits of its highly differentiated technology. For 2024, Emerson Electric Co. (NYSE:EMR) anticipates net sales growth of ~15% and operating cash flow of ~$3.2 billion.
Redburn Atlantic initiated coverage on 8th July on the shares of the company. It gave a “Buy” rating and a $135.00 price target. Insider Monkey’s Q2 2024 data revealed that Emerson Electric Co. (NYSE:EMR) was part of 51 hedge funds.
6) FedEx Corporation (NYSE:FDX)
Expected Earnings Growth: 9.7%
Number of Hedge Fund Holders: 59
Forward P/E Multiple (As of September 30): 13.18x
FedEx Corporation (NYSE:FDX) offers transportation, e-commerce, and business services in the US and internationally.
Wall Street believes that FedEx Corporation (NYSE:FDX)’s long-term growth trajectory is expected to be aided by its wide economic moat, which stems from the cost advantage and vast transportation network.
The market believes that significant savings should drive its earnings growth via the DRIVE initiative and implementation of pricing actions. During the release of Q1 2025 results, FedEx Corporation (NYSE:FDX) reaffirmed the forecast of permanent cost reductions from the DRIVE transformation program of $2.2 billion. The company continues implementing pricing actions and has been progressing with its Network 2.0 transformation to boost efficiency.
FedEx Corporation (NYSE:FDX) has been anticipating a recovery in industrial demand and e-commerce growth. Collectively, these factors should aid the company in achieving low single-digit revenue growth for FY 2025. The company is launching FedEx International Deferred Freight Service in a bid to improve profitability via operational efficiencies. It remains optimistic in implementing the additional surcharges and capturing the anticipated General Rate Increase in January.
FedEx Corporation (NYSE:FDX) should be able to capture peak season surcharges and expects that the condensed shopping period might enhance customer understanding of demand pressures. Moving forward, cost reductions, network optimization, and customer experience enhancements should improve its market position.
As per Wall Street, the shares of FedEx Corporation (NYSE:FDX) have an average price target of $306.74. As per Insider Monkey’s Q2 2024 data, FedEx Corporation (NYSE:FDX) was in the portfolios of 59 hedge funds.
Longleaf Partners, managed by Southeastern Asset Management, released its second quarter 2024 investor letter. Here is what the fund said:
“FedEx Corporation (NYSE:FDX) – Global logistics company FedEx was the top contributor for the quarter. Late in the quarter, FedEx reported strong fiscal year results, highlighting a year of strong cost management in a challenging revenue environment. Earnings per share (EPS) increased by 19%, and reduced capital expenditures narrowed the gap between EPS and FCF per share. With the increase in FCF, the company has become a significant share repurchaser, which is a welcome change. The company also announced a strategic review of their Freight segment. Our appraisal has long accounted for the underappreciated value in FedEx’s less-than-truckload operations. A potential spin-off or sale could unlock substantial value, as comparable companies like Old Dominion trade at significantly higher multiples on revenue, cash flow, and earnings than those applied to FedEx Freight by the market and our appraisal today.”
5) T-Mobile US, Inc. (NASDAQ:TMUS)
Expected Earnings Growth: 33.8%
Number of Hedge Fund Holders: 64
Forward P/E Multiple (As of September 30): 18.59x
T-Mobile US, Inc. (NASDAQ:TMUS) offers mobile communications services in the US, Puerto Rico, and the United States Virgin Islands.
Wall Street believes that T-Mobile US, Inc. (NASDAQ:TMUS) enjoys a wide economic moat, stemming from its brand, reputation, strong network, and spectrum position. Collectively, these factors should continue to aid the company in gaining market share. Given the strategic partnership to acquire Metronet, together with increased guidance for postpaid customer net additions, T-Mobile US, Inc. (NASDAQ: TMUS) continues to position itself for sustained growth in the telecom industry. The company expects to lead the industry in service revenue growth, core adjusted EBITDA growth, and adjusted FCF growth for the full year.
While T-Mobile US, Inc. (NASDAQ:TMUS) is open to new deals, it is focused on pure-play fiber and partnering to leverage equity. The market experts believe the pricing environment remains sustainable, with significant potential for future pricing actions. The company continues experimenting with 5G broadband pricing to gauge customer response.
Considering the anticipation of normal seasonal churn trends and a strategic approach to capital allocation, T-Mobile US, Inc. (NASDAQ:TMUS) is well-placed to achieve growth in H2 2024. Its network breadth, depth, and technological leadership should continue to act as competitive advantages. For 2024, the company expects postpaid net customer additions to be between 5.4 million – 5.7 million, an increase from the previous guidance of 5.2 million – 5.6 million. Its core Adjusted EBITDA should come in the range of $31.5 billion – $31.8 billion as compared to the prior guidance of $31.4 billion – $31.9 billion.
Tigress Financial upped their price objective on shares of T-Mobile US, Inc. (NASDAQ:TMUS) from $205.00 to $235.00, giving a “Buy” rating on 12th August. As per Insider Monkey’s Q2 2024 database, T-Mobile US, Inc. (NASDAQ:TMUS) was in the portfolios of 64 hedge funds.
4) The Cigna Group (NYSE:CI)
Expected Earnings Growth: 13.6%
Number of Hedge Fund Holders: 66
Forward P/E Multiple (As of September 30): 10.81x
The Cigna Group (NYSE:CI) offers insurance and related products and services in the United States.
The Cigna Group (NYSE:CI)’s diversified and complementary business lines, together with its comprehensive medical plan services and coordinated solutions, continue to form a wide economic moat. Moreover, its unique managed care organization business emphasizing pharmacy benefit management, specialty pharmacy services, and employer-based medical insurance should continue to act as critical tailwinds for long-term growth.
The pharmacy benefit services business, Express Scripts, should continue to be aided by strong client demand and innovation. While The Cigna Group (NYSE:CI) remains on track to divest Medicare Advantage business by Q1 2025, it reaffirmed its commitment to negotiating affordable pharmaceutical prices and is confident about achieving the growth targets for 2024 and beyond. The Cigna Group (NYSE:CI) expects continued growth in US employer Select and Middle market segments.
Despite the potential softening in the employer marketplace, the company expressed confidence in securing appropriate pricing for 2025. The Cigna Group (NYSE:CI) remains focused on offering access to the lowest-cost and best-available solutions, including biosimilars. The company expects growth opportunities in specialty areas, which include new therapies and expanding relationships. Given the strategic investments in innovative programs and a focus on affordability and value, The Cigna Group (NYSE:CI) remains well-placed to maintain a competitive edge.
Cantor Fitzgerald reaffirmed an “Overweight” rating on the shares of The Cigna Group (NYSE:CI), issuing a price target of $400.00 on 16th September. Out of 912 hedge funds we tracked at the end of Q2 2024, The Cigna Group (NYSE:CI) was in the portfolios of 66 hedge funds.
3) American Express Company (NYSE:AXP)
Expected Earnings Growth: 17%
Number of Hedge Fund Holders: 68
Forward P/E Multiple (As of September 30): 18.25x
American Express Company (NYSE:AXP) operates as an integrated payments company in the United States, Europe, and Internationally.
The company’s strong brand recognition and network effects continue to form a wide economic moat. American Express Company (NYSE:AXP) has been tagged as a premium card company in the industry, which helps it in targeting a more affluent customer base. Also, those cards demonstrate pricing power in the form of higher annual fees. Wall Street remains optimistic about its stable business model. American Express Company (NYSE:AXP) carries out operations as a closed-loop network for the cards that are issued.
As a result, the company can capture more of the economic profit of a single credit card payment as compared to other credit card issuers. Notably, strategic acquisitions remain underway with a focus on enhancing the dining portfolio.
Approximately 40 products are expected to be refreshed globally by year-end. American Express Company (NYSE:AXP) acquired 3.3 million new cards in Q2 2024, with 70% being premium fee-based products. This exhibits the company’s confidence in attracting and retaining high-quality premium customers. American Express Company (NYSE:AXP) should close FY 2024 with strong momentum, aided by its marketing and product refresh initiatives.
Moving forward, American Express Company (NYSE:AXP)’s growth trajectory should stem from its renewed focus on premium cards, attracting younger demographics and strategic partnerships. The increase in fee-paying customers, acceleration in annual fee increases, and maintenance of high retention rates should continue to act as tailwinds for the company’s stock.
Keefe, Bruyette & Woods increased their price target on the shares of American Express Company (NYSE:AXP) from $265.00 to $280.00, giving an “Outperform” rating on 8th July.
Artisan Partners, an investment management company, released its first quarter 2024 investor letter. Here is what the fund said:
“American Express Company (NYSE:AXP) shares rose 22% this quarter. This is an interesting case study given our earlier discussion about inflation. American Express operates one of the largest credit card networks in the world. Its revenue is largely a function of a fee rate applied to the dollar value of goods and services that are transacted through its network. That dollar value is, of course, nominal. As inflation pushes up the value of those goods and services as it has for the past few years, American Express will capture that value through its fee structure. The past few years inflation has clearly been a benefit. Aside from its inherent inflation protection, the business is a very strong one. Payments continue to shift toward electronic forms, benefiting American Express. It also has a strong brand that attracts loyal and highly profitable customers that are the envy of the industry. Recent results have been strong with revenues moving nicely ahead of GDP.”
2) CRH plc (NYSE:CRH)
Expected Earnings Growth: 27.5%
Number of Hedge Fund Holders: 75
Forward P/E Multiple (As of September 30): 15.36x
CRH plc (NYSE:CRH) offers building material solutions in Ireland and internationally.
CRH plc (NYSE:CRH)’s ability to maintain pricing power even in the competitive market, together with its diversification and strong presence in North America, continues to make up its wide economic moat. Its diverse geographic footprint and product offerings further strengthen its competitive advantages. Moving forward, the company’s diversified business model, strategic acquisitions, and optimism around market trends should continue to drive revenue growth.
CRH plc (NYSE:CRH) made a strategic move by transforming itself into a predominantly US-focused company. Wall Street believes that the emphasis on the US market should continue to act as a potential catalyst for unlocking additional value. Significant opportunities in the US construction and building materials sector offer a strong growth narrative for CRH plc (NYSE:CRH).
By concentrating its efforts on North America, it plans to capitalize on the region’s robust construction activity and infrastructure development plans. With the expectation of improved infrastructure spending and construction activity in the US, CRH plc (NYSE:CRH)’s strategic positioning is expected to yield substantial benefits for the company and its shareholders.
CRH plc (NYSE:CRH) anticipates healthy demand in infrastructure and non-residential segments, with the anticipation of positive pricing momentum and continued margin expansion. The company increased its full-year adjusted EBITDA guidance, which is now expected in the range of $6.82 billion – $7.02 billion. This upward revision is backed by favorable market conditions and a strong balance sheet.
Truist Financial upped their price objective from $100.00 to $110.00, giving a “Buy” rating on 9th August. L1 Capital, an investment management firm, released its second-quarter 2024 investor letter. Here is what the fund said:
“Three companies detracted from the Fund’s performance by more than 0.5% – CRH plc (NYSE:CRH), Eagle Materials and Mastercard.
In our view, measuring the performance of investments over short time horizons such as three months is meaningless. While CRH and Eagle Materials detracted from the Fund’s returns this quarter, they were both leading positive contributors in the prior quarter. Since Inception of the Fund over 5 years ago, both companies have been top ten contributors to the Fund’s returns.
Recently, there has been some negative data that is causing a sell-off in the share price of CRH and Eagle Materials. Both these companies supply building products to the infrastructure, residential and commercial construction sectors. CRH has around 75% exposure to North America, with the remainder principally Europe (CRH has also recently acquired the majority of Adbri in Australia). Eagle Materials solely operates in the U.S.
Demand from the U.S. infrastructure sector is likely to remain robust for the medium term due to increased Federal and State spending, supported by the $1.2 trillion Infrastructure Investment and Jobs Act. Short term activity has been disrupted by bad weather – we think this is complete noise and is just slightly delaying projects, although CRH and Eagle Materials’ June 2024 quarterly results will likely be impacted…” (Click here to read the full text)
1) PDD Holdings Inc. (NASDAQ:PDD)
Expected Earnings Growth: 85.2%
Number of Hedge Fund Holders: 86
Forward P/E Multiple (As of September 30): 9.64x
PDD Holdings Inc. (NASDAQ:PDD), formerly known as Pinduoduo Inc., is a multinational commerce group that owns and operates a portfolio of businesses. It continues to focus on the digital economy so that local communities and small businesses can benefit from higher productivity and new opportunities.
Market experts opine that PDD Holdings Inc. (NASDAQ:PDD)’s wide economic moat lies in the team purchase model, enabling bulk buying with the help of direct partnerships with manufacturers. This eliminates intermediaries (such as distributors and middlemen) and helps in reducing costs. The company’s long-term growth should be backed by higher consumer demand for affordable products in China, small-scale merchants who continue to seek alternatives to Alibaba and healthy management execution. PDD Holdings Inc. (NASDAQ:PDD)’s dominance in the value-for-money segment and high operational efficiency should help it gain market share.
The company continues to focus on supply chain improvements and merchant support and plans to increase investments. It has been actively exploring opportunities in the global market while, at the same time, it is prioritizing compliance and core strengths. Next, PDD Holdings Inc. (NASDAQ:PDD) is focusing on the agriculture sector and is also promoting the adoption of high-quality agricultural products. The company’s long-term investments are being targeted at fostering high-quality development and expanding the benefits of the digital economy.
In Q2 2024, PDD Holdings Inc. (NASDAQ:PDD) saw its revenues coming at RMB97,059.5 million (US$13,355.8 million), reflecting a rise of 86% from RMB52,280.7 million in the same quarter of 2023. This growth was due to an increase in revenues from online marketing services and transaction services. As per Wall Street, the shares of PDD Holdings Inc. (NASDAQ:PDD) have an average price target of $159.91.
As per Insider Monkey’s Q2 2024 data, 86 hedge funds reported owning stakes in PDD Holdings Inc. (NASDAQ:PDD). Hayden Capital, an investment management firm, released its second-quarter 2024 investment letter. Here is what the fund said:
“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)
While we acknowledge the potential of PDD as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than PDD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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