8 Most Undervalued Value Stocks To Buy According To Analysts

3. PDD Holdings Inc. (NASDAQ:PDD) 

Average Upside Potential: 36.12%

Forward P/E: 8.88

EPS Growth This Year: 83.00%

Number of Hedge Fund Holders: 86

PDD Holdings Inc. (NASDAQ:PDD) is a multinational commerce group owning and operating a portfolio of businesses including Pinduoduo and Temu. While Temu is an online marketplace, Pinduoduo is an e-commerce platform offering products related to agricultural produce, apparel, shoes, bags, mother and childcare products, food and beverage, electronic appliances, and others. The company was incorporated in 2015.

PDD has emerged as one of the major e-commerce players in China. As stated by the investment management company, Baron Funds, PDD’s competitive moat lies in its team purchase model that facilitates bulk buying through direct partnerships with manufacturers, thereby eliminating intermediaries and lowering costs. With more demand for affordable products in China complimented with small-scale merchants finding alternatives to Alibaba, PDD has driven growth. In September, PDD shares soared over 40% after China announced an economic plan to stimulate its economy. Investors looking for exposure to the Chinese e-commerce landscape can consider the stock.

For the second quarter, the company recorded total revenues of RMB97,059.5 million, up 86% year-over-year. Meanwhile, net income attributable to ordinary shareholders was RMB32,009.4 million, up 144% as compared to the prior-year quarter.

The management predicts the revenue growth to decline ahead due to external challenges and intense competition. As the firm plans to create a healthy and sustainable ecosystem, it will be investing significantly in the platform’s trust and safety to help high-quality merchants thrive which could cause potential declines in profitability.