7 Cheap Software Stocks to Invest In

3. PagSeguro Digital (NYSE:PAGS)  

Forward P/E Ratio as of October 3: 6.68  

Upside Potential: 61.87%

Number of Hedge Fund Holders: 32

PagSeguro Digital (NYSE:PAGS) is a Brazilian payment processing company that offers digital payment solutions for businesses and consumers. The company offers mobile payments and point-of-sale devices.

PagSeguro Digital (NYSE:PAGS) has seen rapid growth as e-commerce and digital payments continue to rise in Brazil. The company’s revenue and earnings growth have been strong, but the stock price has been under pressure due to high interest rates in Brazil.

The company has significantly increased its FY2024 Total Payment Volume (TPV) guidance, driven by strong demand for its merchant services and a focus on medium and large enterprises. Despite the high-interest rate environment in Brazil, PagSeguro Digital’s (NYSE:PAGS) financial income growth has outpaced its expenses, and the company’s net income margin is expected to recover.

PagSeguro Digital’s (NYSE:PAGS) stock is trading at a significant discount relative to the broader sector. Its forward PE is 6.68, a 43.36% discount to its sector median of 11.79. Analysts expect the company to grow its earnings by 14.84% this year and have a consensus on the stock’s Buy rating, setting an average share price target at $16.19, which represents a 61.87% upside potential from its current level.

As of the second quarter, the stock is held by 32 hedge funds, and the stakes amount to $424.82 million. According to Insider Monkey’s hedge fund database, Point72 Asset Management is the largest shareholder in the company and has a stake worth $127.70 million as of June 30.