10 Best Undervalued Stocks to Buy According to Reddit

3. PayPal Holdings, Inc. (NASDAQ:PYPL)

Investors on Reddit that consider the stock undervalued: 12

PayPal Holdings, Inc. (NASDAQ:PYPL) is arguably among the global leaders in the fintech industry. While the company over recent years has gone out of favor with investors due to concerns of market competition and some questionable capital allocation decisions by the previous management, things appear to be turning around under the new CEO, Alex Chriss. Strong financial performance during the first quarter of the year, coupled with a focus on strategic innovation and market expansion has the potential to lure investors into buying the stock.

PayPal Holdings, Inc. (NASDAQ:PYPL)’s Complete Payments (PPCP) platform is now available in 34 countries, including the United Kingdom, Canada, and Europe. and is gaining momentum. The company has been actively venturing into the complementary side of its business as well, through the acquisition of e-commerce firm Honey in 2020 for $4 billion, and strategic investments in Uber last year.

During Q1 2024, the company reported an EPS of $1.40 per share, beating analyst estimates by 18 cents. This was primarily driven by improved transaction margins, expense discipline, optimal marketing spending, and an increase in interest income. Its revenue for the quarter was also higher, reported at $7.7 billion against forecasts of $7.51 billion. It also generated a free cash flow of $1.8 billion. Venmo is also contributing significantly to the company’s overall growth, with a 21% YoY increase in consumers using Venmo’s debit card.

PayPal Holdings, Inc. (NASDAQ:PYPL) is one of the best undervalued stocks to buy according to Reddit, currently trading at a value that is 80% lower than its all-time high and 15 times its forward earnings, making it an attractive stock for investors to buy. There is consensus among industry experts on the stock’s Buy rating with an average share price target of $72.87, which represents an upside of 22.82%. Moreover, according to Insider Monkey, 82 hedge funds were bullish on the stock at the end of the first quarter. The bearish concern about the stock, though, is that it is facing tough competition from companies like Apple and Alphabet which are entering smaller niches in the digital payments industry and coming up with apps that are easier to use.