Citi Sees Buying Opportunity in PDD

PDD Holdings Inc. (NASDAQ:PDD) is one of the 12 Most Profitable Cheap Stocks to Buy Right Now. On June 27, Citi said that China’s major internet companies have become unpopular with investors this year as money has shifted toward AI chipmakers. However, the bank believes the recent decline in these stocks has gone too far and this has now created an attractive buying opportunity.

Citi named PDD Holdings Inc. (NASDAQ:PDD) as one of its top picks. The bank said many of these internet companies are trading near their lowest valuations in years, even though they continue to generate strong cash flows. According to the brokerage, the recent weakness in the share prices does not reflect the underlying strength of their businesses.

Additionally, Citi said that these stocks would still appear cheap even if profits were lower than expected over the next year. This indicates that much of the negative news has already been priced into their shares.

Another reason for Citi’s optimism is the strong financial position of these companies. PDD Holdings Inc. (NASDAQ:PDD) alone holds about $63 billion in cash, cash equivalents, and short-term investments. While the AI hardware sector could continue attracting investors in the near term, Citi expects investors to eventually return to profitable internet companies with strong core businesses, healthy cash generation, and expanding AI capabilities.

PDD Holdings Inc. (NASDAQ:PDD), formerly Pinduoduo Inc., is a multinational commerce group best known for its e-commerce platforms, Pinduoduo and Temu.

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