5 Most Undervalued Large-Cap Stocks To Buy According To Analysts

2. Pinduoduo Inc. (NASDAQ:PDD)

Number of Hedge Fund Holders: 71

Average Analyst Price Target: $181.4

Market Capitalization: $174.7 billion

Upside Potential: 39.8%

Based in Ireland, Pinduoduo Inc. (NASDAQ:PDD) is a broad-line retail company. It operates an e-commerce platform under the Pinduoduo name that offers products such as agricultural produce, apparel, shoes, bags, and more.

Pinduoduo Inc. (NASDAQ:PDD) was spotted in the portfolios of 71 hedge funds in the fourth quarter, with a total stake value of $83.3 billion.

On March 21, Citigroup analysts maintained a $185 price target and Buy rating on Pinduoduo Inc. (NASDAQ:PDD).

Baron Funds said this about Pinduoduo Inc. (NASDAQ:PDD) in its fourth-quarter 2023 investor letter:

“We added to our digitization theme by building a position in PDD Holdings Inc. (NASDAQ:PDD), a leading Chinese e-commerce platform. Founded in 2015, the company has emerged as China’s second largest e-commerce player, capturing approximately 20% market share. In our view, PDD’s competitive moat lies in its team purchase model that facilitates bulk buying through direct partnerships with manufacturers, thereby eliminating intermediaries (e.g., distributors and middlemen) and lowering costs. Key factors driving the company’s meteoric growth include rising consumer demand for affordable products in China amid an economic slowdown, small-scale merchants seeking alternatives to Alibaba, and superior management execution. PDD’s revenue growth outpaces gross merchandize value growth owing to rising take rates as merchants aggressively compete for consumer traffic on the platform. In our view, PDD should continue to gain market share given its dominance in the value-for-money segment, growing affordable branded product offerings, and high operational efficiency. We believe the company’s growth will be further supported by the recent launch of its international e-commerce platform, Temu, which has become one of the fastest growing apps globally. Leveraging China’s excess manufacturing capacity, Temu has strong negotiating power with domestic suppliers and attracts global consumers with competitively priced products. Temu’s recent initiatives to improve unit economics, coupled with achieving variable breakeven in the sizable U.S. market, showcase management’s skill and commitment to sustained growth. We expect PDD to at least double its earnings and free cash flow in the next three years, with the potential for continued compounding thereafter.”