With the market off to a hot start in 2024 and hitting latest highs, investors might assume that they missed the boat and that there aren’t many bargains in the marketplace. But there are still compelling investment opportunities.
Take a take a take a look at PayPal (NASDAQ: PYPL). This fintech giant’s shares are about 80% off their peak price. Don’t let that price history discourage you, though.
Listed below are three reasons that PayPal is a no brainer growth stock to buy now with $100 and hold for the long term.
Leader in digital payments
Considered one of the apparent reasons that investors will want to scoop up shares of PayPal is as a consequence of just how much it dominates the electronic payments industry. PayPal was founded greater than twenty years ago, so it has a protracted and successful history of facilitating global commerce.
This generally is a scaled business, with a presence in greater than 200 countries and regions. Total payment volume (TPV) was $1.5 trillion in 2023. That was up 13% over 2022 and greater than double the amount in pre-pandemic 2019.
Data from the tip of 2022 shows that PayPal was probably essentially the most widely accepted digital wallet, with a near 80% acceptance rate, at the best 1,500 retailers in North America and Europe. And its Braintree segment, which caters to merchants, has grown TPV at a much faster clip than the rest of the business.
PayPal is clearly a dominant force. As online shopping and other sorts of cashless transactions grow to be more popular, the business should cash in on a long-term growth driver.
Competitive advantages
PayPal possesses quite a couple of competitive advantages. That’s one other vital reason buying this stock is sensible right away.
As of Dec. 31, the business had 428 million energetic accounts using its services, making a two-sided platform of merchants and consumers. This results in powerful network effects, which is a very attractive characteristic for a business to have.
Because PayPal has so many users already on its platform, it’s ready to make exponentially more connections between buyers and sellers. Which suggests that PayPal is more helpful to all of its users than smaller payments systems.
The company has solved the chicken-and-egg problem. In other words, it is perhaps virtually unattainable for any person to start out out a contemporary network from scratch because they may struggle in order so as to add merchants and consumers with none existing customers to deal with or anywhere to purchase.
This setup gives PayPal an incredible data advantage. It’s ready to gather insights about spending patterns and user behavior from transactions that it processes from each retailers and individuals, leading to improved authorization rates and lower fraud. A payments company that only works with one side of a transaction doesn’t have the thorough perspective PayPal does. Merchants can appreciate this, giving the company a key selling point.
In spite of everything, just because PayPal possesses these advantages doesn’t suggest it’s fully shielded from the changing industry landscape. On the tip of the day, it’s all about making the lives of users easier, with commerce becoming more frictionless over time. There isn’t any such thing as a shortage of competitors that PayPal has to fend off. But its standing throughout the industry does deserve some credit.
Low-cost valuation
It’s actually discouraging for shareholders to see that PayPal hasn’t participated available available in the market’s rally for the rationale that start of 2023. Regardless that the business has continued to post solid financial results, the stock is affordable right away, trading at a forward price-to-earnings ratio of just 12.2.
At that type of beaten-down valuation, investors might assume that they’re getting a subpar business. But based on the elements outlined above, PayPal is healthier than the common company in the marketplace. It also has a strong balance sheet and generates regular free money flow that management uses to repurchase shares.
I feel starting a small position throughout the stock is sensible.
Where to take a position $1,000 right away
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Neil Patel and his clients haven’t any position in any of the stocks mentioned. The Motley Idiot has positions in and recommends PayPal. The Motley Idiot recommends the following options: short March 2024 $67.50 calls on PayPal. The Motley Idiot has a disclosure policy.
1 No-Brainer Growth Stock to Buy Now With $100 and Hold Through 2024 (and Beyond) was originally published by The Motley Idiot