11 Best Undervalued Stocks to Invest in Now

5. PDD Holdings Inc. (NASDAQ:PDD)

Forward P/E Ratio: 10.09 

Earnings Growth This Year: 75.64%

Number of Hedge Fund Holders: 85

PDD Holdings Inc. (NASDAQ:PDD) is a multinational company that operates several businesses, primarily focusing on e-commerce. The company helps businesses and people join the digital economy, which means it assists in moving traditional businesses online. This helps local communities and small businesses by increasing their productivity and providing new opportunities. The company is known for two popular platforms including Pinduoduo and Temu.

The strategic edge of the company lies in its networking power and the web of networks it has established to handle sourcing, logistics, and fulfillment for its businesses. During the fiscal third quarter of 2024, PDD Holdings Inc. (NASDAQ:PDD) achieved a total revenue of $14.16 billion, reflecting a 44% increase year-over-year. Baron Funds in its Q3 2024 investor letter stated that the company has become China’s second-largest e-commerce company, capturing over 20% of the market share. The company uses algorithms to create a highly engaging platform, driving user and merchant growth in a virtuous cycle. This approach enhances user interaction and encourages repeat purchases.

Moreover, GreenWood Investors stated the following regarding PDD Holdings Inc. (NASDAQ:PDD) in its Q4 2024 investor letter:

“Aside from transitory foreign exchange translation losses (as opposed to trading losses), the two other notable detractors from our portfolio were MEI Pharma and PDD Holdings Inc. (NASDAQ:PDD) in 2024.

PDD Holdings founder Colin Huang is who inspired us to “run 3x faster,” as the relentless corporate culture of PDD has built an e-commerce company with roughly the same GMV (gross merchandise value) of Amazon in one-third the time it took Amazon to build itself. Shares reacted negatively when the company decided to reinvest its record margins into even faster growth and creating a healthier supplier ecosystem. As it looks set to create a second Amazon with its international site Temu, we are highly attracted to the opportunity. Sales are growing 4x faster than Amazon’s, yet shares are priced at less than a quarter of the Amazon earnings multiple.

PDD is a perfect example of why we want to look outside of the “Big Ten” companies that are nearly a third of global market indices. We would not want to compete with the demanding corporate culture of PDD and Temu. Its operating model is relentless at identifying efficiency throughout the manufacturing and selling supply chain. Not only is it a mor formidable competitor than Amazon, and growing much faster, but the valuation is 4x more attractive than Amazon’s…” (Click here to read the full text)