Tuesday's IBD 50 Stocks To Watch pick, PDD Holdings, is trying to break out past a new buy point this week following a big rally in recent weeks. That makes the Temu owner one of the best stocks to watch right now.
Founded in 2015, PDD's operations include the China-focused e-commerce platform Pinduoduo along with international discount retail platform Temu. Pinduoduo offers deep discounts and takes what analysts call a gamified approach to shopping. The app features games that let users win further discounts and encourage frequent check-ins.
Temu is a shopping site that is taking PDD's playbook for e-commerce in China and applying it globally. Based in Boston, it's one of the drivers of PDD stock.
The Temu shopping site connects consumers around the world with products made in China and shipped directly. On the Temu app, brightly colored stickers for "lightning deals" pop up left and right. Prices can be jaw-dropping: a $7 handheld vacuum, $8 wireless earbuds and a $40 bedroom dresser.
In its latest reported quarter on March 20, PDD reported fourth-quarter earnings and sales that easily topped expectations, with revenue more than doubling from a year earlier.
For the three months ending Dec. 31, PDD said it earned $2.44 per share on sales of $12.5 billion. Adjusted per-share earnings surged 102% while revenue jumped 117%.
Be sure to read how to adjust to changing market conditions, with IBD's new exposure levels.
PDD Stock Breaks Out
PDD stock is trying to break out past a 142.32 buy point in a cup-with-handle base, according to IBD MarketSurge chart analysis. Shares briefly topped the entry Monday before closing below it. If the stock is able to retake the buy trigger, the 5% buy area will go up to 149.44. PDD stock fell 1.6% Tuesday morning, about 3% below the latest entry.
Remember, IBD's equity exposure range sits at 40%-60%, so investors have the flexibility to raise exposure as leading stocks break out past correct buy points.
PDD stock boasts a best-possible 99 IBD Composite Rating, according to IBD Stock Checkup, due to a strong record of profitability and big stock gains over the last year. That makes PDD stock one of the best stocks to watch.
A key indicator to watch is the stock's relative strength line. The RS line remains relatively far from its old highs, but is starting to move higher again amid the latest breakout attempt. Ideally, the RS line should hit a new high on the breakout day or shortly thereafter. So far, that hasn't happened yet, which is a warning signal.
Best Stocks To Watch
Three recent IBD 50 Growth Stocks To Watch picks are among the best stocks to watch.
| Company | Symbol | Buy point | Type of base |
|---|---|---|---|
| Texas Roadhouse | 157.12 | Flat base | |
| Procept BioRobotics | 52.32 | Flat base | |
| Interactive Brokers | 112.50 | Tight area |
Source: IBD Data As Of May 8, 2024
Follow Scott Lehtonen on X, formerly known as Twitter, at @IBD_SLehtonen for more on the best stocks to buy and watch and the stock market.
