10 Most Undervalued S&P 500 Stocks to Buy Now

6. PayPal Holdings Inc. (NASDAQ:PYPL)

Forward P/E Ratio as of March 14: 13.39

Number of Hedge Fund Holders: 94

PayPal Holdings Inc. (NASDAQ:PYPL) provides a technology platform for digital payments. It connects merchants and consumers and offers services under brands like PayPal, Venmo, and Braintree. It facilitates online and in-person transactions, fund transfers, and utilizes various funding sources, which include bank accounts, credit cards, and cryptocurrencies.

The company’s core growth engine in 2024 was its branded checkout segment, which saw consistent quarterly growth in transaction margin dollars, with an acceleration in US growth during Q4 2024. Upgraded checkout experiences, now live for over 25% of US traffic, reduced latency by 40% and boosted conversion rates by 1%. The Buy Now, Pay Later (BNPL) segment was also a major contributor, with $33 billion in total payment volume, which marked a 21% year-over-year increase. BNPL users spend 30% more on average. Fastlane, which is the company’s streamlined checkout feature, reached nearly 2,000 merchants, and attracted 75% new or re-engaged PayPal users.

For 2025, PayPal Holdings Inc.’s (NASDAQ:PYPL) priority is scaling adoption of these innovations. It will expand globally and deepen merchant partnerships, while also growing its omnichannel presence with PayPal Everywhere.

Longleaf Partners Fund attributed the company’s strong performance to its improved leadership, cost management, and share buybacks, which led to significant FCF growth. It stated the following regarding PayPal Holdings Inc. (NASDAQ:PYPL) in its Q4 2024 investor letter:

“PayPal Holdings, Inc. (NASDAQ:PYPL) – Digital payments platform PayPal was a contributor for the quarter and the year. The company delivered strong results, with gross margin dollars continuing to grow in the mid-high single digits for the last few quarters. Effective cost management further contributed to double-digit FCF growth, a key metric in our analysis. PayPal also demonstrated its commitment to enhancing shareholder value by repurchasing shares at a 10% annualized basis in the most recent quarter, leading to even stronger FCF per share growth. Much of what we envisioned at our initial investment has materialized quicker than anticipated. This strong performance has been driven by the improved leadership of relatively new CEO Alex Chriss.”