The recent market selloff may have you concerned. But, I’m thinking about buying opportunities in “megatrend” stocks. These are the companies on the winning side of disruption. Some of these ideas hinge on one megatrend. Yet, in the case of PayPal (NASDAQ:PYPL) stock, you have an opportunity to ride multiple megatrends.
The company may be more than ready for prime time. But, I believe the party’s just started for the payments giant. Moving beyond its roots as a online payment processor, PayPal is fast disrupting financial services. This is not only due to technology, as demographic megatrends also play a massive role.
Millennials are entering their prime earning years, and Generation Z is entering the workforce. That said, PayPal holds a clear edge over traditional banking institutions by offering the convenience and flexibility these generations crave
With these factors at play, it’s a no-brainer to say that PYPL stock is not only a buy. Make shares a core holding, as the company’s underlying catalysts continue to accelerate.
Massive Runway for PYPL Stock
As I’ve discussed before, PayPal continues to show impressive growth in both DAU (daily active users) and TPV (total payment volume). And with growth numbers staying within range of past highs, the company has yet to fully scale. In other words, despite around $17.8 billion in revenue and a market capitalization of over $100 billion, massive runway remains in the cards.
It’s mind-boggling when you sit down and think of PayPal’s TAM (total addressable market). Not only are we talking about those cutting ties with big banks, but there are other massive areas the company can pursue to sustain its current growth.
You have the growing gig economy. You have the unbanked, shut out by the old school banking’s ways of doing business. In short, the company could continue to expand its reach. Doing to payments what Amazon (NASDAQ:AMZN) did for e-commerce: Start in one niche, then eventually dominate the marketplace.
Moreover, Facebook (NASDAQ:FB) is another tech giant with their eyes on payments. But what the FAANG stocks may be considering as a side hustle, PayPal’s doing as a full-time job. So, in a battle of generalists versus specialists, I’ll go with the specialist.
Market Meltdown Equals Strong Entry Point
I believe PYPL stock to be a long-term core holding. With its multiple megatrend catalysts, there’s no reason why this stock shouldn’t be in your portfolio. But, I know what you’re thinking. With shares tumbling from above $120 per share to under $90 per share in just 1 month, why should I buy now?
If anything, recent performance shouldn’t be a concern, but a call to action. Months prior, getting into the megatrend opportunity was a pricier prospect. However, with shares trading near their 52-week lows, seize the opportunity.
Furthermore, buying PYPL stock today means getting in while it trades for only 32 times forward earnings. With revenues projected to climb 17.3% between 2020 and 2021, and earnings per share slated to grow above 20% in the same timeframe, shares are a steal at their current multiple.
I understand concerns over forward earnings. The coronavirus from China will impact near-term results, and PayPal is no exception. However, don’t avoid this stock due to short-term concerns. This company is well-capitalized to weather the current storms. And not only will the company survive, but it will thrive in the years ahead.
Meanwhile, the current crisis could take a toll on traditional financial institutions. So with big banks scrambling to survive the meltdown, they won’t have the energy, resources, or time to counter PayPal’s march towards financial services domination.
This not only gives the company a clearer edge against its old school peers. It also demonstrates the tremendous upside available in PYPL stock at today’s prices.
Multiple Megatrends Make PYPL A Long-Term Core Holding
Want to be on the winning side of several megatrends? Buy PYPL stock. This opportunity offers a convergence of megatrends. Technological changes are to the company’s benefit, as are demographic or generational changes.
Put it all together, and there’s no reason to sit on the sidelines.
Overall, PayPal is the future of payments — so don’t be on the losing side of this development. With this one company, you can ride multiple waves of change.
With market turmoil driving shares to a more than fair valuation, now’s the time to pounce on PYPL stock. However, this isn’t a “buy the dip, sell the rip” opportunity. Instead, make this a long-term core holding, as the payment digitialization trend is just getting warmed up.
Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. The power of being “first” gave Matt’s readers the chance to bank +2,438% in Stamps.com (STMP), +1,523% in Ulta Beauty (ULTA) and +1,044% in Tesla (TSLA), just to name a few. Click here to see what Matt has up his sleeve now. Matt does not directly own the aforementioned securities.