5 Growth Stocks To Buy That Are Too Cheap To Ignore

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

Number of Hedge Fund Holders: 97

PayPal Holdings, Inc. (NASDAQ:PYPL) is a payments platform provider that allows individuals and businesses to make cross border payments. The firm is headquartered in San Jose, California, the United States.

PayPal Holdings, Inc. (NASDAQ:PYPL) has grown its active accounts by an average of ten million over the past four years. Out of these, the firm has also grown its active accounts to 429 million this year from 403 million last year and during the same time period, its active merchant accounts have also grown by 9%. Additionally, the firm’s annualized payment transactions per account have grown by 12% annually. Finally, Wall Street analysts expect PayPal Holdings, Inc. (NASDAQ:PYPL) to grow its revenue by 10% to 15% each year from now to the end of 2025.

Morgan Stanley kept a $134 share price target for the company (current share price is $84) in October 2022, as it outlined that PayPal Holdings, Inc. (NASDAQ:PYPL)’s subsidiary Venmo’s deal with Amazon is a good development. 97 out of the 895 hedge funds polled by Insider Monkey during this year’s second quarter had bought the company’s shares.

Out of these, PayPal Holdings, Inc. (NASDAQ:PYPL)’s largest investor is Ken Fisher’s Fisher Asset Management which owns 17 million shares that are worth $1.2 billion.

RiverPark Funds mentioned the company in its Q3 2022 investor letter. Here is what the fund said:

PayPal provides direct exposure to the secular growth in ecommerce-driven digital payments as it is the most accepted digital wallet on-line. More than 3/4 of the 1,500 largest online retailers across North America and Europe accept PayPal, which is almost triple the acceptance of Apple Pay, the number two digital wallet. PayPal is also a key beneficiary of the current dramatic shift in consumer buying habits brought on by the pandemic, as well as the relatively newer consumer-to-consumer payment trends through its Venmo peer-to-peer (P2P) payment service. With a 2Q non-GAAP operating margin of 19%, PYPL also has significant margin expansion potential given that competitors Adyen, Visa and Mastercard have 50%-65% operating margins. We believe the combination of the secular growth of eCommerce and P2P payments, along with expanding operating leverage and the strategic use of the company’s significant and growing cash balance should fuel a mid-20% earnings growth rate over the next five years. This, to us, presents an excellent risk/reward profile given that PYPL trades at a modest premium to the market multiple and a 6% 2023 FCF yield.”

Disclosure: None. You can also take a look at 11 Best Day Trading Stocks To Buy and 15 Biggest Dow Companies By Market Cap.

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