Opinions The Panic-Proof Portfolio (Stockchase Research)
PDD HoldingsPDDTOP PICKApr 23, 2024
Stock price when the opinion was issued
As of Jun 24, 2026. Market Open.
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Yesterday, China did a smart thing by cutting their federal funds rate by 50 basis points. This is gigantic and has impact, by making their economy--and stocks--stronger. Also, he suggests they reign in their real estate industry. China has to do something to revive its economy. Also, both US candidates in this election year will bash China. Given all this, he's changed his mind about Chinese stocks and recommends Baidu, Alibaba, Pinduoduo and JD.com. They are very cheap and are real businesses. Also, they are recognized internationally. No, he won't buy them, because he doesn't trade, but if he did trade, he would.
As PDD is a Chinese company, we can only offer brief comments.
These e-commerce platforms usually offer significant discounts in the first place to attract customers, in combination with China’s cheap manufacturing capabilities and unclear product quality.
Companies like Temu, Aliexpress, and Shein used to apply the same strategies even at a loss to gain customers’ traction in the first place and it usually takes 1 month on average until those orders are shipped.
However, we think these strategies are not sustainable, AMZN has built a network of logistic solutions that will be hard to duplicate effectively.
Also what is sold on those platforms could also be also on AMZN’s platform by third-party sellers.
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We reiterate this disruptive e-commerce platform as a TOP PICK. It trades at 21x earnings and supports a robust 39% ROE. We like that cash reserves are growing rapidly and the company continues to invest in technology enhancements. We recommend trailing up the stop (from $100) to $110, looking to achieve $179 -- upside potential of 38%. Yield 0%
(Analysts’ price target is $179.14)