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Jim Cramer Weighs In on PayPal Holdings Inc (NASDAQ:PYPL)

We recently published a list of Jim Cramer’s Latest Portfolio: 10 Best Stocks to Buy. Since PayPal Holdings Inc (NASDAQ:PYPL) is on the list, it deserves a deeper look. Jim Cramer in his latest program talked about discipline during short-term market rallies and emphasized the importance of knowing when to take some profits off the table […] Read More...

We recently published a list of Jim Cramer’s Latest Portfolio: 10 Best Stocks to Buy. Since PayPal Holdings Inc (NASDAQ:PYPL) is on the list, it deserves a deeper look.

Jim Cramer in his latest program talked about discipline during short-term market rallies and emphasized the importance of knowing when to take some profits off the table when things are going your way. According to Cramer, the “most important lesson” in short-term rallies is that “you always have to work hard to prepare yourself for the future.”

Cramer said that you should not “give in” to the market euphoria and hit “buy, buy, buy” when the market is “roaring.” The CNBC host said for many it becomes difficult to sell because they feel they were late to the rally and want to hold on to their best-performing stocks during bull runs. But Cramer questioned this thinking: if your portfolio sees big gains and you let it “ride” the rally without selling any stocks and eventually those gains begin to “evaporate,” how is that different from totally missing out on the rally? “It isn’t,” Cramer said.

Cramer talked about the post-COVID rally of 2020 and 2021 where the market saw an “unbelievable” bull run, only to pare those gains after the Fed’s pivot and its “war” on inflation. Jim Cramer advised investors to always remain “tethered” to reality.

“If you would have sold stocks gradually on their way up as I told you to do you’d have been in a much better shape as the market spent the next 11 months getting obliterated,” said Cramer.

For this article we watched several latest programs of Jim Cramer aired over the past few days and picked 10 stocks he’s bullish on. With each stock we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? 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).

Jim Cramer Latest Portfolio: PayPal Holdings Inc (NASDAQ:PYPL) Best Stock to Buy

Jim Cramer Latest Portfolio: PayPal Holdings Inc (NASDAQ:PYPL) Best Stock to Buy

Jim Cramer Latest Portfolio: PayPal Holdings Inc (NASDAQ:PYPL) Best Stock to Buy

Image by mohamed Hassan from Pixabay

PayPal Holdings Inc (NASDAQ:PYPL)

Number of Hedge Fund Investors: 82

Talking about PayPal Holdings Inc (NASDAQ:PYPL) in a latest program, Cramer said he has found new faith in the company since the arrival of new CEO Alex Chriss.

“I know there is a lot of competition, but this man, this gentleman seems he really knows what he’s doing.”

Cramer recommended PayPal Holdings Inc (NASDAQ:PYPL) investors to hold on to the stock, but told them not to buy more shares until they see “better numbers.”

New Street Research recently started covering PayPal Holdings Inc (NASDAQ:PYPL) with a Buy rating, citing the company’s shift to value from price and its ability to better leverage advantages it has on both consumer and merchant fronts over competitors.

New Street’s analyst Soomit Datta called 2024 a “transition year,” adding they expect more “news and supportive KPIs on new initiatives” before monetization comes through more in 2025.

PayPal Holdings Inc (NASDAQ:PYPL) shares have been hammered over the past one year, having lost 14%, as new competition and growth concerns keep investors at bay. While PayPal earnings have seen declines, the company managed to grow its revenue YoY in high single digits. Analysts think the company’s new features and products including an increased focus on unbranded checkouts, smart receipts, launch of stablecoin PayPal USD, expansion of Venmo, in addition to its push into digital ads business would help the stock in the near future.

PayPal Holdings Inc (NASDAQ:PYPL) bulls believe the stock’s valuation has become attractive. It forward P/E ratio of 14 is now 55% lower than its five-year average. Wall Street analysts expect PayPal Holdings Inc (NASDAQ:PYPL) earnings to grow 11.2% next year. If we incorporate PayPal new product growth strategy and catalysts, the stock looks undervalued. PayPal Holdings Inc’s (NASDAQ:PYPL) cash sits at about $14 billion, and long-term debt stands at only $9 billion.

Polen Focus Growth Strategy stated the following regarding PayPal Holdings, Inc. (NASDAQ:PYPL) in its first quarter 2024 investor letter:

“We eliminated our PayPal Holdings, Inc. (NASDAQ:PYPL) position after a frustrating holding period. PayPal is the largest digital wallet company in the world, with 400 million users and 35 million merchants, but it has been losing market share over the last 18 months as management has been very slow to innovate and bring a true one-touch checkout experience to its customers. Friction in the checkout experience can be annoying to buyers and financially problematic for merchants, leaving lost sales on the table. Apple Pay (and others) has been winning market share from PayPal as it is a true one-touch checkout experience and is highly integrated into iPhones. We believed that PayPal had finally upgraded its technology last summer and should have been able to deploy it to their merchant customers quickly.”

Overall, PayPal Holdings Inc (NASDAQ:PYPL) ranks 4th on Insider Monkey’s list titled  Jim Cramer Latest Portfolio: 10 Best Stocks to Buy. While we acknowledge the potential of PayPal Holdings Inc (NASDAQ:PYPL), our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than PayPal Holdings Inc (NASDAQ:PYPL) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and Jim Cramer is Recommending These 10 Stocks in June.

Disclosure: None. This article is originally published on Insider Monkey.

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