Parent company of the Temu app Securities in PDD portfolio (PDD) is Tuesday’s selection for IBD 50 stocks to watch. The China-based e-commerce stock is attempting to rise from a support level, creating a potential buying zone.
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Chinese stocks rallied overnight Bloomberg Report that the Beijing authorities are considers a recovery plan of 278 billion dollars plan to revive a struggling stock market. PDD stock has held up better than most other Chinese stocks over the past year.
The stock reversed slightly Tuesday midday. But it holds above the 50-day moving average, and a bounce off the line would create a buy zone.
The e-commerce company operates the Temu app which sells goods at low prices. Its app is available in 48 countries and has been popular in the US and UK since its launch in fall 2022. And it topped Amazon Marketplace with over 31 million downloads worldwide between 1-22 January. according to Statista.
Its Chinese rival is Ali Baba (BABA). Temu is tied with Free market (MELI) for the top spot out of 60 stocks in the Internet retail industry. Amazon.com (AMZN) occupies third place. The group ranks No. 27 out of 197.
Configuring PDD stock
PDD stock tested its 10-week moving average and find support. Investors could use a buy range between 142.44 and 156.68. It also formed a tight four-week bullish pattern, which is a variation of the three week tight pattern. The four-week training gives a 152.99 point of purchasewhich coincides with its 52-week high on January 11.
PDD stock rose a whopping 18.1% volume after PDD beat his third quarter results and sales estimates on November 28. It reached a new high before reversing and falling on January 16, as Chinese stocks fell in sympathy with Baidu (BEGINNING). Reports indicate that Baidu’s AI platform is linked to Chinese military research.
PDD stock took another hit on Jan. 17, after a report that fourth-quarter results and China GDP growth over the whole of 2023 was one of the lowest levels in decades. Chinese stocks fell sharply following the report. The stock fell below its 21-day exponential moving average but found support at its 50-day moving average. It is line of relative force followed suit and withdrew amid the selloff.
Profits rise while sales accelerate
PDD’s third-quarter profits rose 31%, up from 28% in the previous quarter, but still lagged behind the 117% increase two quarters ago. Quarterly sales growth accelerated to a healthy 89%, compared to 54% and 46% in the previous two periods. Analysts expect profit growth of 24% for the full year 2023 and 31% in 2024, according to MarketSmith.
PDD Stock Holds IBD Accumulation/distribution rate of B+, indicating fairly significant institutional buying over the past 13 weeks.
Mutual funds also accumulated shares, with 1,655 funds holding PDD shares in December, up from 1,586 in September and 1,481 in June. PDD has the best IBD 99 possible Composite score. Meanwhile, it is EPS rating is a moderate 74, which includes the previous year’s losses in the calculation.
Follow Kimberley Koenig for more stock market news on X/Twitter @IBD_KKoenig.
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