7 Best Cheap Stocks to Buy According to Billionaire Ray Dalio

5) PDD Holdings Inc. (NASDAQ:PDD)

Bridgewater Associates’ Stake Value: $166,834,435 

Number of Hedge Fund Holders: 86

Forward P/E Ratio as of 4 October: 10.91x

PDD Holdings Inc. (NASDAQ:PDD) is a multinational commerce group that owns and operates a portfolio of businesses and is active in the online retailing industry.

PDD Holdings Inc. (NASDAQ:PDD) uses the group-buy business model. It enables the users to invite family and friends for bulk purchases of the products directly from the concerned manufacturers. As a result, the manufacturers can get bulk orders, and customers tend to benefit from rock-bottom prices. This strategy of the company offers a significant competitive advantage which should help it in strong revenue growth in the near term.

PDD Holdings Inc. (NASDAQ:PDD) continues to prepare itself to enter a new phase prioritizing the health of its platform ecosystem rather than short-term profitability. The company focuses on high-quality development, supply chain improvements, and merchant support. Its long-term growth should stem from increased consumer demand for affordable products in China, small-scale merchants who continue to seek alternatives to Alibaba and healthy management execution.

In a recent earnings call, PDD Holdings Inc. (NASDAQ:PDD) highlighted significant growth in online marketing services and transaction services. It also emphasized long-term patient investments for achieving sustainable growth.

According to Wall Street, the shares of PDD Holdings Inc. (NASDAQ:PDD) have an average target price of $166.68. 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)