PayPal's Payoff: The Road To $100

PayPal's price target of $90 to $100 per share by summer 2025

Investment Thesis

PayPal (PYPL) is a stock that is boring and has been left for dead. I recommended this stock to you on 2 November 2023, at $55. Today, the stock is up about 25% and has underperformed the benchmark.

Data by YCharts

Accordingly, I share your frustration. I was too early in recommending this stock as undervalued. This is something that I'm working on to avoid in the future.

In short, this underperformance, caused many of you to drop this ''dog'' and the basis that it wasn't exciting enough.

But here I explain why I believe that PYPL will reach a price target of $90 to $100 per share by summer 2025. And why there's still more upside in this name.

In short, paying 13x forward non-GAAP EPS for a business that is growing its EPS line by somewhere around 10% to 15% strikes me as a compelling investment and I continue to view this stock positively.

Important Context for Investing in PayPal

DVR has a diversified portfolio. Some stocks, like SentinelOne (a buy recommendation), Samsara (a buy recommendation), or Ouster (now downgraded to a hold) are faster growing businesses. These businesses need to reach certain revenue targets for the thesis to work out. However, these businesses are highly sensitive to interest rate changes. And with interest rates expectations changing, their share prices are highly volatile.

Meanwhile, other businesses' prospects, such as Uranium Energy (a buy recommendation), Enovix (a buy Recommendation), Doximity (a buy recommendation), or even PayPal, have other idiosyncratic elements to drive their upside prospects. For example, UEC is driven by the expectations for future energy coming from a carbon free source to match EV and data center demand, while Enovix is expected to grow revenues on the back of its upcoming battery commercialization at the back end of 2025.

My point? It's very important to have a diversified portfolio. In fact, the reason why my portfolio's returns are as strong as they are is that I have a diversified portfolio. And I recommend that you follow my guidance and have a diversified portfolio.

If you want to invest in AI stocks, then, go ahead. But don't put more than 5% of your portfolio into the hottest sector of the market. Think about your investments, in terms of how many man-hours you have put in to accumulate that capital. Invest prudently and with diversification.