We recently compiled a list of the 10 Unrivaled Stocks of the Next 5 Years. In this article, we are going to take a look at where PayPal Holdings Inc. (NASDAQ:PYPL) stands against the other unrivaled stocks.
In the first week of February, the market experienced little changes as investors analyzed earnings reports from big tech companies, a better-than-anticipated January jobs report, and updates regarding President Trump’s tariff policies. According to Josh Schafer, Yahoo Finance Markets team, the S&P 500 remained almost unchanged for the week, while the Nasdaq Composite and Dow Jones Industrial Average decreased 0.4%.
Schafer noted that over 62% of S&P 500 companies are done reporting their earnings and the year-over-year growth rate for the index keeps rising. As of February 7, the S&P 500 was on track for earnings growth of 16.4% compared to the previous year. This exceeds the 11.8% earnings growth analysts had projected at the start of January and it would also mark the fastest pace of growth rate in three years.
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The January jobs report, released on Friday, February 7, highlighted resilience in the labor market with an unexpected fall in the unemployment rate and higher-than-expected wage growth. Additionally, December’s monthly job gains saw an upward revision that showed the US labor market ended the year 2024 in a better position than previously reported. This led economists to argue that the Federal Reserve will not be cutting interest rates in the near future. As a result, this puts more pressure on inflation data to cool down before the central bank considers reducing borrowing costs.
The Consumer Price Index (CPI) is set to be released in the second week of February on the morning of Wednesday. Investors are also expected to be paying close attention to President Trump’s planned announcement of new 25% tariffs on steel and aluminum imports and for additional details on reciprocal duties across the board.
Methodology
To compile our list of the 10 unrivaled stocks of the next 5 years, we sifted through our own rankings, financial media reports, ETFs, and various online resources. We used search phrases like “unrivaled stocks” and “wide moat stocks” to compile a list of the best unrivaled stocks. From an initial list of over 25 stocks, we focused on the top 10 stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s Q3 2024 database of 900 elite hedge funds. The 10 unrivaled stocks of the next 5 years were then ranked in ascending order based on the number of hedge funds holding stakes in them as of Q3 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A consumer in a cafe paying for goods using a mobile payment app.
PayPal Holdings Inc. (NASDAQ:PYPL)
Number of Hedge Fund Holders: 90
PayPal Holdings Inc. (NASDAQ:PYPL) is an American multinational financial technology company that operates an online payments system and offers digital payments to merchants and consumers. The company offers online payments solutions in the majority of countries that support online money transfers. PayPal Holdings Inc. (NASDAQ:PYPL) is revolutionizing digital money transfers through its unique offerings and a two-sided network that connects millions of users to make effortless online and in-person transactions by connecting their bank accounts and credit cards to the PayPal account. As one of the top unrivaled stocks of the next 5 years, PayPal Holdings Inc. (NASDAQ:PYPL) has a leadership position in payments and commerce.
The company is strategically focused on growth initiatives like enhanced mobile checkout experiences to capture a significant portion of the e-commerce market. In 2024, PayPal Holdings Inc. (NASDAQ:PYPL) launched new branded checkout experiences, rolled out PayPal Everywhere, introduced Fastlane, and expanded PayPal Complete Payments. With PayPal Complete Payments, the company is building an end-to-end suite of solutions that solves more small business needs. In Q4 2024, PayPal Holdings Inc. (NASDAQ:PYPL) reported strong adoption with 45% of SMB processing and checkout volume now on PayPal Complete Payments. Additionally, in the quarter, the company focused on selling Fastlane to major brands that can drive future volume growth.
In September 2024, PayPal Holdings Inc. (NASDAQ:PYPL) launched PayPal Everywhere which is driving significant growth in debit card adoption and opening new categories of spend. As a result, the company added more than 1.5 million first-time PayPal debit card users in Q4 2024 and debit card total payment volume (TPV) was up nearly 100% in the quarter. PayPal Holdings Inc. (NASDAQ:PYPL) plans to expand PayPal Everywhere to several European markets in 2025.
Overall, PYPL ranks 9th on our list of the unrivaled stocks of the next 5 years. While we acknowledge the potential of PYPL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PYPL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.