Zacks Investment Ideas Highlights: PDD Holdings and Pinterest

For immediate release

Chicago, IL – December 8, 2023 – Today’s Zacks Investment Ideas feature highlights PDD Holdings Inc . PDDs and Pinterest PINS.

Santa’s Rally Ride: Why I’m betting on these 2 stocks

The price movement of stock market indices this year has reflected seasonal trends to an almost unusual degree. Many of the big rallies and corrections are consistent with those seen in the S&P 500 seasonal chart below.

Based on seasonal trends, as well as the generally bullish factors pushing stocks higher this year, I believe stocks should see a final push higher in the next few weeks, as is consistent with the annual Santa Claus rally.

In this article, I’ll share two stocks that enjoy top Zacks Ranks, compelling valuations, and strong technical trading momentum that should take the market higher.

PDD Holdings Inc.

PDD Holdings Inc., also known as Pinduoduo, is a Chinese e-commerce platform that utilizes social commerce and group buying dynamics. Founded in 2015, Pinduoduo gained notoriety for its innovative approach to online shopping, encouraging users to team up with friends and family to secure discounts on a wide range of products.

The platform is known for its focus on good value deals, often making it a popular choice for budget users in China. Pinduoduo’s rapid growth has positioned it as one of the major players in the Chinese e-commerce market.

Pinduoduo’s earnings forecasts have been unanimously upgraded by analysts over the past two months, giving the stock Zacks Rank #1 (Strong Buy) rating. Earnings estimates for the current quarter have been revised up 28% and are expected to rise 40% year-over-year to $1.69 per share. FY23 earnings estimates rose 15.5% and are expected to jump 43% year-on-year to $5.89 per share.

PDD Holdings Inc also has a very reasonable valuation. Today it trades at just 20x FY24 earnings. Also, with 3-5 year annualized EPS growth forecasts of 40.5%, it has a PEG ratio of just 0.5x, which could be considered a discounted valuation.

Last week, after its third-quarter earnings report, PDD beat analysts’ estimates and lagged significantly. EPS came in 38.4% above analysts’ estimates, and sales showed a 94% year-over-year increase. Since then, PDD stock has built a compelling technical bull flag.

The Earnings and Flag Gap is a fantastic trade setup, and as it is further backed by a top Zacks Rank, there are even better chances to trade higher. If shares of PDD Holdings Inc could trade above the $143.50 level, this would signal a technical breakout. Alternatively, if the stock breaks and closes below the $138.25 support level, investors may want to wait for another opportunity.

Pinterest

Pinterest is a social media and visual discovery platform. It allows users to discover and save ideas about a variety of interests, including home decor, fashion, recipes, travel and more, by creating digital collections known as “boards.”

Users can explore and share images and content they find inspiring or interesting. Pinterest serves as a platform for both personal inspiration and business promotion, with many businesses and content creators using it to reach and engage with their target audience through visual content. PINS has 482 million monthly active users and generates revenue through ad sales.

Pinterest has seen its earnings estimates steadily rise since late this summer, giving it a Zacks Rank #2 (Buy) rating. Earnings estimates for the current quarter have been revised higher by 11% over the past two months and are expected to rise 76% year over year to $0.51 per share. FY23 earnings estimates were raised by 11.5% and are expected to rise 73% year-on-year to $1.07 per share.

Like Pinduoduo, Pinterest trades at a very attractive valuation for such a high-growth company. PINS trades at 26.4 times 2024 earnings and expects EPS growth of 36% per year over the next 3-5 years. This gives it a PEG ratio of 0.73.

Pinterest stock also forms a very good technical trade setup. After breaking out of a flag last week, the price started to form another flag to trade from. If PINS stock can break above the $34.10 level, that would signal a long signal. However, if it cannot hold above the $33.25 level, investors may want to wait for another setup.

Bottom row

Although 2023 is quickly coming to an end, these last few weeks can be a great time to secure year-end trading profits. While investors certainly shouldn’t risk any significant gains from what has been a landmark year, there’s no reason to let this very bullish period pass without taking advantage.

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Past performance is no guarantee of future performance. Inherent in any investment is the possibility of loss. This material is provided for informational purposes only and nothing in it constitutes investment, legal, accounting or tax advice or a recommendation to buy, sell or hold any security. No recommendation or advice is given as to whether any investment is suitable for a particular investor. It should not be assumed that all investments in securities, companies, sectors or markets identified and described have been or will be profitable. All information is current as of the date hereof and is subject to change without notice. Any views or opinions expressed may not reflect those of the company as a whole. Zacks Investment Research does not engage in investment banking, market making or securities asset management activities. These returns are from hypothetical portfolios consisting of stocks with a Zacks Rank = 1 that have been rebalanced monthly with zero transaction costs. These are not the returns of actual stock portfolios. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information on the performance metrics shown in this press release.

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