1 S&P 500 company from my ‘best stocks to buy now’ list

Zaven Boyrazian explains why this cheap-looking S&P 500 growth enterprise is on his ‘best stocks to buy now’ list for 2024 and beyond.

| More on:

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

I always keep a list of what I believe are the ‘best stocks to buy now’. It’s a handy habit that helps me keep track of exciting opportunities to capitalise every time I have spare capital to invest. But despite being a British investor, my list isn’t isolated to the London Stock Exchange.

There are plenty of international stocks, especially in the S&P 500, that look like they offer promising long-term returns. And while US stocks often trade at more lofty premiums compared to UK shares, every once in a while an attractive price emerges.

Right now, the US stock that’s caught my attention is one that’s already in my portfolio – PayPal Holdings (NASDAQ:PYPL). Let’s take a closer look.

A payment processing giant

In the world of digital payment processing, PayPal’s king. The online payment platform currently controls an estimated 45.5% of the US market, according to Datanyze. That puts it significantly ahead of its closest competitors, Stripe and Shopify Payments.

And while its rivals are certainly turning up the heat, PayPal has retained its crown, and continues to expand its total payment volume, even in the current weakened economic landscape.

But if that’s the case, why has the PayPal share price collapsed by over 70% since July 2021? There are a lot of factors behind this downfall. However, a leading cause was miscommunication.

Management had previously announced its target to double its user base to 750 million. But shortly after this announcement, the entire growth plan was scrapped, with the focus shifting towards improving the quality of its existing user base. Pairing this U-turn in strategy with a lofty valuation and the subsequent stock market correction translated into a brutal selloff.

However, things have started to look interesting.

A buying opportunity for a comeback story?

Today, PayPal has different leadership. Intuit’s Alex Chriss now sits in the corner office as CEO, and EY’s Jamie Miller has taken over the role of CFO. Meanwhile, Sirni Venkatesan has joined the ranks as CTO after leaving his position in Walmart.

So what’s happened since this management shake-up? It’s still early days, but PayPal’s already started expanding its partnerships with the launch of a new feature called Fastlane. This eliminates the need for online shoppers to fill out passwords, shipping & billing addresses, or card information without sacrificing security.

It’s a massive win for improving the shopping experience, and it’s one that Adyen, Salesforce, and Adobe have already integrated into their own commerce platforms.

Meanwhile, Shopify’s just added support for PayPal wallet transactions. In other words, PayPal now has brand new avenues to expand its total payment volume. And when paired with margin improvements, earnings are now back in double-digit growth territory.

At a forward price-to-earnings ratio of just 17.4, PayPal shares seem to be undervalued if management continues to deliver progress. And while the threat of alternative payment processing solutions can’t be ignored, the lower valuation makes it a risk worth taking, in my opinion. That’s why I think it could be one of the best stocks to buy for my portfolio so I’ll be buying more soon.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Zaven Boyrazian has positions in PayPal and Shopify. The Motley Fool UK has recommended Adobe, Adyen, PayPal, Salesforce, Shopify, and Walmart. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Up 26%, can the BT share price really push higher still?

The BT share price has surged on several catalysts in 2024, but there’s evidence to suggest that the stock could…

Read more »

Man writing 'now' having crossed out 'later', 'tomorrow' and 'next week'
Investing Articles

What are the best dividend shares to buy right now?

As shares in B&M European Value Retail have fallen, the dividend yield has reached a 10-year high. Should investors be…

Read more »

Surprised Black girl holding teddy bear toy on Christmas
Investing Articles

My favourite FTSE 100 passive income stock that keeps the Christmas coffers full

The holiday season is expensive and can leave many consumers struggling to make ends meet. Here’s how I use a…

Read more »

Investing Articles

The latest growth forecasts suggest the Glencore share price will hit 555p!

Harvey Jones has been disappointed by the performance of the Glencore share price since he bought the commodity stock last…

Read more »

Dividend Shares

A closer look at the 11% dividend yield forecast for Phoenix Group shares

Phoenix Group shares have one of the highest dividend yields in the FTSE 100 index today. Could this be a…

Read more »

Investing Articles

If I’d put £25,000 into the FTSE 350 at the start of 2024, here’s how much I’d have today!

Many FTSE shares have rebounded this year as interest rates look set to keep heading lower and market appetite for…

Read more »

Investing Articles

Up 40%, but experts forecast the easyJet share price could soon hit 664p! Time to buy?

The easyJet share price has been flying lately and stock analysts are predicting more fun to come. But there's only…

Read more »

Storytelling image of a multiethnic senior couple in love - Elderly married couple dating outdoors, love emotions and feelings
Investing Articles

Worried about tax raids? Here’s how I’m targeting a £44,526 passive income with shares

Investing in a Self-Invested Personal Pension (SIPP) or Individual Savings Account (ISA) can supercharge one's passive income, says Royston Wild.

Read more »