Big-name investor and hedge fund manager over at Appaloosa David Tepper is one of the billionaires to keep watch of in any given year as he makes bets in corners of the market that may be deep of value. As a big fan of Tepper’s contrarian investment approach, I find monitoring his quarter-to-quarter moves worthwhile. In this piece, we’ll check out three cheap-looking stocks that his fund picked up in the third quarter of 2024. 

PDD Holdings

Perhaps the most remarkable move Tepper’s fund made in the third quarter was the topping up (Appaloosa picked up over 3 million PDD shares in Q3) of the PDD Holdings (NASDAQ:PDD) position. Indeed, Chinese internet stocks have been down and out for another full year. And while they’re not everyone’s cup of tea (many view Chinese stocks as less than investable given the many years’ worth of lackluster moves), I do think true contrarians have a lot to love about shares as China looks to turn a corner in the latter half of the 2020s. 

PDD shareholders have been treated to a wild ride in the past five years, with the stock making extreme double-digit percentage moves in both directions. Still down around 46% from its all-time highs, PDD stands out as one of the perfect value buys for investors who aren’t a fan of the price of the merchandise on display in the U.S. stock market. At writing, shares of the e-tailer behind the incredibly popular Temu go for 10.53 times trailing price-to-earnings (P/E).

For a firm behind one of the most iconic and disruptive low-cost e-commerce combatants out there, I find the rock-bottom multiple to be shockingly low. Even if there is stiffer competition on the low end of e-commerce, I still find PDD to be one of the best deep-value growth options on the market. If China’s economy turns, PDD could easily gain faster than the rest of the market.

JD.com

PDD wasn’t the only Chinese e-tailer Tepper’s fund took a liking to in the third quarter. Appaloosa added almost 3 million shares of JD.com (NASDAQ:JD) as well, which trades at a mere 12.7 times trailing P/E. With impressive and improving margins, JD stands out as a firm that could really shine bright if the Chinese economy were to rise again. It’s still a long way from the top, with shares of JD down more than 63% from its peak. 

With a new share repurchase program (that will go through August 2027) taking the place of the old one that ended last year, I find management to be making the most of the downturn. Though it could take more than a year (or even two) to start flying higher again, I do think patient contrarians can turn the odds in their favor with the name. Indeed, Tepper and company seem to see value in the unloved Chinese e-commerce scene. Call them a value trap, if you will, but there are some that see real upside in the names despite all the non-stop negativity surrounding the big Chinese internet names.

Lyft

Lyft (NASDAQ:LYFT) is another notable buy (Tepper’s firm bought over 7 million shares in Q3) that all but the most independent-thinking contrarian would care to own at these depths. The stock has lost more than 82% of its value from its peak. And though the underdog ride-hailing firm has a relatively low bar ahead of it, there is also no shortage of challenges as it looks to gain market share. 

How could Lyft give itself a big lift in the coming years? Perhaps the rise of autonomous vehicles (AVs) could help even the playing field and help gain usage.

Benchmark analyst Daniel Kurnos believes that Lyft will announce some sort of AV partnership at some point in the future (perhaps within the next two years) could put in a “valuation floor” in the stock—he’s right. Far too many investors are underestimating Lyft in this environment.

Sure, the firm has faded relative to its top rival of late. But with a mere 16.5 times forward P/E multiple, there’s real value in the name, especially if it’s ready to make moves in the AV era.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.