7 Cheap Rising Stocks to Invest In

3. PDD Holdings Inc. (NASDAQ:PDD)

FWD PE Ratio: 11.27

1-Month Stock Price Performance: 44.96%

Number of Hedge Fund Holders: 86

PDD Holdings Inc. (NASDAQ:PDD), formerly known as Pinduoduo Inc., has quickly risen to prominence in the global e-commerce landscape. The company operates the Pinduoduo platform, a well-known e-commerce site in China, which is celebrated for its wide array of products and innovative team purchase model.

It improves the shopping experience and motivates consumers to engage in group buying, making it more appealing for those looking for value. Alongside this, the company manages Temu, an international marketplace designed to provide consumers worldwide with high-quality yet affordable products.

Despite being founded just nine years ago, it has become one of China’s largest e-commerce companies, largely by serving lower-income shoppers in less affluent regions, offering more affordable options compared to competitors.

Analysts are bullish on PDD Holdings (NASDAQ:PDD) as it has a consensus Strong Buy rating from 47 analysts. The average price target of $159.34 has a 17.70% upside to the stock’s price on September 27. It ranks among our cheap rising stocks to invest in.

One of the remarkable aspects of the company’s growth is the popularity of the Temu app, which has garnered an impressive 735 million downloads globally, according to a recent article on the site, Chain Store Age.

Additionally, Temu has seen monthly visits soar past 500 million in the first quarter of 2024, which is evidence of strong consumer interest and engagement with the platform. This kind of traction suggests that the company is effectively reaching a broad audience, which is essential for long-term success in the highly competitive e-commerce sector.

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)