Here’s your Temu trade on PDD Corp ($PDD) – May 10, 2024
This is Dan Fitzpatrick at StockMarketMentor.com. Let’s talk about PDD Holdings ( NASDAQ: PDD ).
One of the companies in their holdings is Temu. I’ve bought stuff on Temu before, it’s temu.com, they sell some pretty cheap crap there, but it’s all really, really inexpensive, they sell some good stuff there too.
The point is, that company is doing really, really well. I noticed there is a write-up on it in IBD, about how PDD Holdings ( NASDAQ: PDD ), they’re talking about Temu, could be a threat to Amazon ( NASDAQ: AMZN ). I don’t know about that, everybody seems to be a threat to Amazon ( NASDAQ: AMZN ), Google ( NASDAQ: GOOGL ), Microsoft ( NASDAQ: MSFT ), or Meta ( NASDAQ: META ), somehow it just never quite pans out.
But still, it led me back here, and this is why. We see this stock trading, it’s pretty choppy, but if you really want to break it down into formations that matter, I can do it. You can see here, it’s a nice little cup, a little handle, and then you see the thing spikes up here. It’s all above the 50-day moving average, by the way. Then what does it do? It pulls back, pinches, and hits the 200-day moving average, and now it’s running up again.
I look at this type of thing, and it just makes sense to me that this stock is going higher. Then I went over and looked at MarketSmith or as they call it now, MarketSurge, I don’t care about the chart, I’ve already seen that, but I look at the fundamentals, on the earnings, the sales, and the pre-tax margins, blue is good. Positive numbers, plusses are good, and so all we see are “plusy, bluey” numbers here.
We’ve got nice quarterly year-over-year earnings growth on the top line here. Sales or revenues are nice, quarterly earnings growth is accelerating bigly. And then on the pre-tax margin, all in the 30s. So this is a really, really good chart for fundamentals as well as technicals. The weekly chart also looks pretty good. This green hash mark line here is earnings, and you can see how earnings just continue to run higher.
I would certainly expect this, at least right now, to also continue to go higher. So, frankly, I think your trade on this would probably be a breakout here. You’re not really giving up that much in profit by waiting for the stock to come up here. If you were really an eager beaver you could take a partial position here.
But here’s the challenge there, the stock could easily come down and test the 50, it could easily do that. I could also run up here to a new high, we just don’t know. We do know earnings are in two weeks, 14 days, so my suggestion is, to watch this stock, watch it like a hawk. Check it out every day, and my bet is, that you’re going to get a pretty darn good trade on this.
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