1 Incredibly Cheap Fintech Stock to Buy Now

PayPal (PYPL) is a leading fintech company that has seen its stock price decline significantly in recent years. Despite this, the company's fundamentals remain strong, and its current valuation makes it an attractive investment opportunity.

PayPal's revenue growth has been steady, with a 9% increase in 2023 and an 8% year-over-year increase in the first nine months of 2024. Its earnings per share (EPS) have also been strong, with a 30% increase in Q1 FY24. Compared to its fintech peers, PayPal's revenue growth is on par with Block (SQ), which reported 25% full-year revenue growth in 2023. However, PayPal's EPS growth is more robust than Block's 13% increase in 2023.

PayPal's competitive strengths are formidable. Its network effects, with over 432 million active users and 29 million merchants, create a strong value proposition for both consumers and businesses. This scale generates significant economies of scale, with PayPal expecting $6 billion in free cash flow this year. Additionally, PayPal's two-sided platform and industry-leading fraud detection capabilities further enhance its competitive position.

PayPal's strategic acquisitions and partnerships have significantly contributed to its long-term growth potential. Venmo, acquired in 2013, has become a leading P2P payment platform with over 80 million users, driving user growth and monetization. iZettle, acquired in 2018, expanded PayPal's presence in the small business market, offering integrated payment solutions and increasing merchant services revenue. These strategic moves have allowed PayPal to diversify its revenue streams, tap into new markets, and maintain a competitive edge in the fintech landscape.

PayPal's current price-to-earnings (P/E) ratio is 17, which is significantly lower than its historical average of 35 and the industry average of 25. This indicates that PayPal is currently undervalued compared to its historical performance and industry peers.

PayPal's free cash flow (FCF) and return on equity (ROE) are impressive. In 2023, PayPal generated $6 billion in FCF, while Block (SQ) generated $2.5 billion. PayPal's ROE was 14.5% in 2023, compared to 11.5% for Block. Both companies have strong FCF and ROE, but PayPal's are notably higher.

PayPal's dividend yield is around 1.7%, which is lower than the average yield of other fintech companies like Square (SQ) at 1.9% and Affirm (AFRM) at 2.7%. However, it is higher than the S&P 500's average yield of approximately 1.5%. PayPal's dividend yield, while not the highest in the sector, provides a stable income stream for investors.


In conclusion, PayPal's strong fundamentals, competitive strengths, and cheap valuation make it an attractive investment opportunity. Its steady revenue growth, impressive EPS growth, and high FCF and ROE demonstrate its competitive strength and growth potential. Additionally, its strategic acquisitions and partnerships have contributed to its long-term growth prospects. PayPal's undervalued P/E ratio and stable dividend yield make it an excellent choice for income-focused investors seeking a reliable fintech stock.