PDD - The 3 Best Asian Stocks to Buy in June 2024
2024-06-18 06:13:00 ET
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Asia is, of course, an incredibly vast continent. But most of the Asian companies in which Americans can and should invest are based in either China or India. Since the coronavirus pandemic, the Chinese economy has been stuck in a deep slump. And though it still has major problems, including a very weak real estate market, it is showing signs of rebounding.
For example, last month the country’s retail sales rose 3.7% versus May 2023 while its industrial production advanced 5.6% year-over-year. For its part, the Indian economy, boosted by the opening of many factories that have relocated from China, grew at a blistering 8.2% above inflation during its fiscal year that ended in March 2024. And the country’s central bank expects the economy to expand at a fast pace of 7.2% during the current fiscal year, up from its previous estimate of 7% growth.
With China’s economy showing signs of recovery and India looking like the “next big thing” from an investing standpoint, here are the three best Asian stocks to buy now.
WisdomTree India Earnings Fund (EPI)
Not only is India’s economy growing at an extremely rapid pace but foreigners are investing large amounts into the country. As of May 11, U.S.-based ETFs that invest in Indian stocks benefited from almost $2.7 billion of net inflows since the beginning of the year. That trend paused briefly earlier this month amid doubts about whether Indian Prime Minister Narendra Modi would be reelected. But after it became clear he would remain in office, the pattern resumed, with foreign investors buying $985.5 million of Indian stocks on June 7 and June 10, according to Bloomberg .
Among the key beneficiaries of foreign interest in Indian stocks has been The WisdomTree India Earnings Fund (NYSEARCA: EPI ). Shares climbed 12% in the last three months and it should continue to advance as optimism about the Asian country’s economy increases.
The WisdomTree India Earnings Fund’s holdings are very diversified . Financial services companies account for 21.8% of its holdings while basic materials firms weigh in at 13.4%. Technology stands at 10.5% and industrials are at 9.6%.
Given the ETF’s well-diversified exposure to the rapidly growing Indian economy, it is one of the best Asian stocks to buy.
MakeMyTrip (MMYT)
Leading Indian online travel agency MakeMyTrip (NASDAQ: MMYT ), boosted by India’s rapidly expanding middle class, continued to grow very rapidly and quickly increase its profits.
Last quarter its top line jumped 36.6% versus the same period a year earlier to $148.5 million, while operating profits, excluding certain items, soared 70.4% year-over-year to $19.03 million. For all of fiscal 2024, the company’s adjusted operating profit came in at a brisk $124 million, up from $70 million during the prior year.
The company is benefiting from the trend of increasing disposable income among Indians, spurred by the country’s strong economic growth, CEO Rajesh Magow reported last month. The company is also getting a big lift from an increasing desire by tourists to view India’s spiritual landmarks, Magow noted. Over the last two years, searches for spiritual destination on the company’s platform have nearly doubled, he stated.
PDD Holdings (PDD)
Chinese e-commerce company PDD Holdings (NASDAQ: PDD ) is continuing to grow incredibly rapidly, driven largely by the market share gains of its Temu marketplace. Temu caters to foreign consumers and its share of the U.S. retail market had reached a very impressive total of 17% in April.
The company’s prices tend to be cheaper than Amazon’s (NASDAQ: AMZN ) and it became the top overall shopping app on Apple’s (NASDAQ: AAPL ) app store.
In Q1, PDD’s revenue soared 131% versus the same period a year earlier to $12 billion, while its operating profit jumped an incredible 275% year=-ver-year to $3.6 billion.
On May 24, Goldman Sachs responded to the firm’s Q1 results by upgrading PDD stock to “buy” from “neutral.” The bank reported that the company is benefiting from rising ad revenue along with the increased profitability of Temu. Goldman placed a $184 price target on PDD stock, well above the shares’ current price of around $150.
On the date of publication, Larry Ramer held a long position in EPI. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines .
Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been SMCI, INTC, and MGM. You can reach him on Stocktwits at @larryramer.
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