One of the market’s most promising secular growth narratives has been the rise of digital commerce. Within that growth narrative, one of the most promising sectors has been the digital payment platform industry. And, within that sector, one of the most promising stocks has been PayPal (NASDAQ:PYPL).

Over the past year, PayPal stock is up 50%. Over the past two years, it is up 130%. And, over the past three years, PayPal stock has risen 175%.

Those are big gains for this stock, but the rally isn’t over just yet. The consumer backdrop remains favorable and we are heading into what will likely be a blowout holiday shopping season. Blowout holiday shopping in the era of digital commerce means more people than ever using PayPal for transactions. Thus, this company has a pretty big catalyst on the horizon.

Moreover, the valuation on PayPal stock has become quite great. But not too great. Assuming the secular shift towards digital payments remains a mega-trend, PayPal stock is reasonably worth around $100 per share today.

Thus, at $90, PayPal stock is a slightly undervalued growth stock with a mega-catalyst on the horizon. That means that this could be a good time to buy into this high-growth story.

The PayPal Story Is Strong

At its core, both the theory and numbers support the long-term bull thesis for PayPal stock.

On the theory side, PayPal provides solutions which enable digital commerce. In a world where digital commerce sales are booming and everything from advertising to shopping is going online, a company that provides solutions to enable digital commerce presumably has huge and growing demand. Moreover, this shift shouldn’t slow anytime soon because the world is only becoming increasingly digital. Plus, the shift is actually migrating to phones, where mobile commerce is becoming the next mega-trend. PayPal owns Venmo, which is perhaps the hottest mobile commerce app in the world, so the company is optimally positioned to reap the rewards of the forthcoming mobile commerce boom too.

On the numbers side, PayPal’s growth refuses to slow down, and is actually accelerating in certain key areas. Total payment volume growth was 27% last quarter, and has been in excess of 20% for several quarters in a row. Overall revenue growth has also been in excess of 20% for several quarters now. Venmo volume continues to grow at a robust 70%-plus rate. Merchant Services volume growth continues to run at 30%-plus rate. Mobile volume growth continues to run around 50%. The company continues to add between 6 million to 9 million new accounts every quarter, and the number of payment transactions per active account continues to grow at a steady ~10% rate.

Overall, when it comes to PayPal, the theory and numbers agree that this stock is a big grower that isn’t slowing down and has tons of growth potential left.

Holiday 2018 Is A Big Catalyst

By now, it is common knowledge in the market that retail is bouncing back thanks to robust consumer strength. This robust consumer strength is the byproduct of a vigorous U.S. economy that is finally firing on all cylinders, the likes of which is pushing consumer confidence to essentially 20-year highs and causing a surge in retail sales across the U.S.

This surge is far from over.

The personal savings rate in the U.S. is just shy of 7%, which is pretty high by historical standards. Thus, consumers have a lot of financial firepower saved up to turn renewed confidence into bigger spending. I think that this is exactly what will happen this holiday season, and that renewed economic strength coupled with sky-high consumer confidence, healthy wage growth and a big savings rate will make this holiday season one for the record books.

That is great news for PayPal. A record-breaking holiday shopping season in 2018 means a ton of digital shopping. A ton of digital shopping means a ton of people using PayPal, which will translate into direct benefits for PayPal’s financials and the stock.

Long-Term Drivers Imply $100 Fair Value

The secular growth driver behind PayPal stock is digital payment volume growth. There are estimates out there that peg this market as growing between 10% and 15% over the next several years — but those estimates seem light to me.

After all, cash remains the dominant payment method globally. This won’t remain true for long. Everything is going digital, including shopping and wallets. Thus, digital will soon become the dominant payment method globally. Considering digital payment market share is under 20% today, that means there is tons of growth left for this industry to get to 50% share and up over the next several years.

From this perspective, we think the current era of 20%-plus revenue growth and healthy margin expansion is here to stay for PayPal. Under those assumptions, I think this company can reasonably net about $5.25 in earnings per share in five years. A historically-average 25 forward multiple on that implies a four-year forward price target of ~$131. Discounted back by 10% per year, this equates to a year-end price target of just under $100.

Bottom Line on PYPL Stock

PayPal stock is a long-term winner due to its leadership position in the secular growth digital payments market. While valuation friction will become a problem soon, I don’t see that happening until $100. Until then, this stock should sail higher largely without much noise.

As of this writing, Luke Lango was long PYPL.