7 Cheap Internet Stocks To Invest In Now

2. PDD Holdings Inc. (NASDAQ:PDD)

Forward P/E Ratio: 9.49

Earnings Growth This Year: 84.70% 

Number of Hedge Fund Holders: 86

PDD Holdings Inc. (NASDAQ:PDD) is another leading e-commerce group with a range of businesses. Pinduoduo and Temu are two of the main platforms of the company among others. It has built a network of logistics, sourcing, and fulfillment capabilities to connect businesses with people.

It has been less than a decade since the company was established. During this short time, PDD Holdings Inc. (NASDAQ:PDD) has grown to compete with the giants and is now recognized as the 3rd largest e-commerce company in China.

One of the key differentiating factors of the company is its focus on small and medium businesses. This results in its product listings being cheaper than its competitors thereby attracting more users. During the second quarter of 2024, the company revealed that it has more than 167 million monthly active users and around 50 million of these users originate from the United States.

In terms of financial growth as well, PDD Holdings Inc. (NASDAQ:PDD) has been doing great. The most recent quarter’s revenue grew by 86% year-over-year reaching around $13.74 billion, with net margins growing 8% during the same time.

Its cheap valuation comes as another attraction for its investors. The stock is trading at only 9.49 times its forward earnings, with analysts expecting its earnings to grow by 84.7% during the year. Thereby, making it one of the cheapest internet stocks to invest in now.

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)