15 Best Beaten Down Stocks to Invest In

2) PagSeguro Digital Ltd. (NYSE:PAGS)

% Decline on a YTD Basis: ~41.5%

Number of Hedge Fund Holders: 25

PagSeguro Digital Ltd. (NYSE:PAGS) is engaged in the provision of financial and payment solutions for consumers, individual entrepreneurs, micro-merchants, and small and medium-sized companies in Brazil and internationally.

Morgan Stanley highlighted challenges encountered by the payments industry in Brazil, particularly expressing market saturation as a critical one. Apart from the concerns regarding the core payments business, there is also uncertainty about PagSeguro Digital Ltd. (NYSE:PAGS)’s ability to diversify away from the payments space quickly enough to mitigate the challenges.

That being said, Wall Street believes that PagSeguro Digital Ltd. (NYSE:PAGS)’s growth is expected to be aided by its entry into unsecured business lending. This provides a significant opportunity for diversification and revenue growth and enables the company to leverage its existing merchant relationships and data to provide value-added financial services. Unsecured business lending is expected to offer a new revenue stream with potentially higher margins as compared to traditional payment processing.

By leveraging its vast transaction data, PagSeguro Digital Ltd. (NYSE:PAGS) can assess credit risk more accurately than traditional lenders, potentially resulting in better loan performance and profitability. As merchants are dependent on PagSeguro Digital Ltd. (NYSE:PAGS) for both payment processing and working capital, it can further deepen its relationships and create additional barriers to switching. As per Wall Street, the shares of the company have an average price target of $14.75.