11 Most Undervalued Quality Stocks to Buy Now

2. PayPal Holdings Inc. (NASDAQ:PYPL)

Forward P/E Ratio as of April 14: 12.52

Number of Hedge Fund Holders: 94

PayPal Holdings Inc. (NASDAQ:PYPL) operates a tech platform that enables digital payments for merchants and consumers. It operates a two-sided network that connects merchants and consumers. It enables customers to connect, transact, and send and receive payments online and in person, as well as transfer and withdraw funds using various funding sources, such as bank accounts or Venmo.

In 2024, the company’s branded checkout segment saw consistent quarterly growth in transaction margin dollars. US growth in particular accelerated during the fourth quarter of this year. Upgraded checkout experiences, which are now live for more than 25% of US traffic, reduced latency by 40%, and boosted conversion rates by 1%. Fastlane, which is the company’s streamlined checkout feature, also reached ~2,000 merchants and attracted 75% new or re-engaged PayPal users.

The Buy Now, Pay Later (BNPL) segment of the company had $33 billion in total payment volume, which marked a 21% year-over-year increase in 2024. BNPL users spend 30% more on average as compared to the rest of PayPal Holdings Inc.’s (NASDAQ:PYPL) users. For 2025, the company plans to expand globally and deepen merchant partnerships, while growing its omnichannel presence.

Longleaf Partners Fund 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.”