1. PayPal Holdings, Inc. (NASDAQ:PYPL)
Forward PE as of June 24: 15
Number of Hedge Fund Holders: 82
PayPal Holdings, Inc. (NASDAQ:PYPL) is a prominent digital payments company that facilitates online money transfers. Over the recent years, the company has fallen out of favor for several analysts due to competition concerns and some suboptimal capital allocation decisions by the previous CEO. However, things seem to be turning around under its new CEO, Alex Chriss. Alex Chriss and the CFO, Jamie Miller provided an optimistic outlook for the company based on recent performance and strategic initiatives at the company’s latest earnings call. PayPal Holdings, Inc.’s strong Q1 performance, strategic focus on innovation, market expansion, and operational efficiency, along with positive financial metrics and strategic investments could make the company attractive to investors. In addition, the company is down over 80% from its all-time high, which brings it to an attractive valuation.
PayPal’s latest strategic initiatives toward market expansion could also be beneficial for investors. PayPal Holdings, Inc.’s PayPal Complete Payments (PPCP) platform is gaining momentum and is now available in over 34 countries, including recent expansions to Canada, the U.K., and 20 European markets. With approximately 7% of the small and medium-sized business (SMB) volume already on PPCP, the platform is set to enhance merchant and consumer experiences through improved branded checkout integration.
On top of that, Venmo continues to be a key growth driver for PayPal Holdings, Inc. (NASDAQ:PYPL), with a 21% year-over-year increase in consumers using the Venmo debit card. The focus on increasing balance-funded P2P senders, which grew by 17% in Q1, contributes to overall transaction margin dollar growth. Additionally, PayPal is reinvigorating its remittance business, Xoom, by refining products and implementing a customizable pricing model, as it aims to reverse the negative revenue trajectory.
PayPal Holdings, Inc. (NASDAQ:PYPL) is trading at 15 times its forward earnings, a 55% discount to its historical 5-year average. We said that Cramer recommends Holding PYPL, in our article about Jim Cramer’s Latest Portfolio, but analysts hold a consensus Buy opinion. The company is expected to grow its EPS by 11% this year, and when considering its new product growth strategy and upcoming catalysts, PYPL is worth looking further into at current levels.
PayPal Holdings, Inc. (NASDAQ:PYPL) was part of 82 hedge funds’ portfolios in the first quarter with a total stake value of $4.2 billion. Citadel Investment Group is the biggest shareholder in the company and has a position worth $581.145 million as of Q1.
ClearBridge All Cap Growth Strategy stated the following regarding PayPal Holdings, Inc. (NASDAQ:PYPL) in its first quarter 2024 investor letter:
“We were also active in adding to stable bucket investments PayPal Holdings, Inc. (NASDAQ:PYPL) and UnitedHealth Group where negative near-term sentiment led to more attractive risk/reward profiles. We added to electronic payments provider PayPal as we have growing confidence that new CEO Alex Chriss’s strategic focus areas can improve the company’s performance, particularly in the key branded business.”
While we acknowledge the potential of PayPal (NASDAQ:PYPL) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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