We recently compiled a list of the 10 Best Revenue Growth Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where PDD Holdings Inc. (NASDAQ:PDD) stands against the other revenue growth stocks.
Outlook for the Year 2025: A Positive Year for Equities?
Citigroup has forecasted 2025 to be a positive and strong year for global stocks. Citi expects a rally in global equities to extend into the year 2025 and estimates a 10% EPS growth for global equities which is slightly below analysts’ consensus of 13%.
The stance was that declining interest rates and easing inflation could help boost corporate earnings. The major world stock benchmark, MSCI All Country World Index Local, is expected to reach 1,140 points by the end of this year which signals a 10% increase from its previous close of 1,035.46. Citi added that the United States and emerging market regions could witness the most robust earnings per share growth of about 15%.
Citi remains ‘overweight’ on U.S. equities but believes that the new Trump administration brings a lot of uncertainty with potential tariffs, tax cuts, and deregulation resulting in a ‘complicated mix of favorable and adverse economic effects’. In 2024, the S&P 500 index rallied 24%, driven by the expected Fed rate cuts, optimism relating to Artificial Intelligence, and the potential deregulation under the new US President-elect. Regarding the effect of these drivers on 2025, Citigroup analysts stated:
“While AI is no longer expected to provide as much EPS growth advantage vs. the rest of the index, any continuation of USD strength and policy uncertainty on tariffs could extend its outperformance”
Our Methodology:
In order to compile a list of the 10 best revenue growth stocks to buy according to hedge funds, we first used a stock screener to screen stocks that have more than $2 billion market cap and at least 25% revenue growth over the past 5 years. Moving on, we shortlisted the top 10 stocks from our list which had the highest revenue growth and were the most popular among hedge funds. The 10 best revenue growth stocks to buy according to hedge funds have been arranged in ascending order of their hedge fund sentiment, as of Q3.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A close-up of a customer using the company’s e-commerce platform whilst shopping online.
PDD Holdings Inc. (NASDAQ:PDD)
Number of Hedge Fund Holders: 78
5-Year Revenue Growth: 71.61%
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, food and beverage, electronic appliances, and others. The firm was founded by Colin Huang 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 alongside small-scale merchants finding alternatives to Alibaba, PDD has driven growth. Even Americans looking for bargains have been heading to Temu, which according to Earnest Analytics, had nearly 17% of the US online discount store market as of last November.
For the third quarter, PDD Holdings Inc. (NASDAQ:PDD) recorded total revenues of RMB99,354.4 million, increasing 44% from RMB68,840.4 million in the same quarter of 2023. Regardless of intense competition and external challenges, the topline growth was good. With the plans to create a healthy and sustainable ecosystem, the firm has been investing in its platform ecosystem through merchant support policies and trust and safety updates. The CEO remains positive about this consistent investment which will be driving impactful results in the long term.
Overall PDD ranks 6th on our list of the best revenue growth stocks to buy according to hedge funds. While we acknowledge the potential of PDD as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than PDD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stock To Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.
