Got $ 300? Here is 1 great stock to buy and keep

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You have decided to start investing for the long term in order to progress towards your financial goals. This is great news. So where to start ?

The the stock market can be overwhelming for beginners, but there are some solid fundamental stocks you should consider adding to your portfolio to get things going. here’s why PayPal funds (NASDAQ: PYPL) is a great stock to buy and hold even if you only have $ 300 to invest.

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Pioneer of a cashless world

The company is moving further and further away from cash and digital payments, and PayPal is at the forefront of this movement. The company offers a wide range of tools for merchants to accept payments and for individuals in their daily financial life. Over the past five years, the rise fintech increased quarterly sales and profits by 135% and 267%, respectively. And the stock followed this strong fundamental performance, soaring almost six times during that time.

The increase in online shopping has fueled the success of PayPal. Although the company is no longer a provider of payment solutions for eBay users, its products and services are absolutely necessary in today’s economy. The pandemic has only accelerated the rise of e-commerce, increasing its share of total global purchases from 14% in 2019 to 17% in 2020. This trend is expected to continue in the years to come, supporting demand for PayPal.

In many parts of the world, cash is still the primary method of transaction today. And the fact that about 30% of adults worldwide still don’t have an account with a financial institution or mobile money provider is telling. Since PayPal is currently available in 200 markets and supports 25 different currencies, it is well positioned to take advantage of rising revenues and consumers joining the financial system.

Benefit from strong competitive advantages

A business wouldn’t be great without the presence of a competitive advantage. In PayPal’s case, it is fueled by dominant intangibles, including a strong brand and innovative culture. The company is recognized worldwide as a leader in safe, secure and timely payments, factors that cannot be compromised.

Additionally, PayPal’s innovation engine is still running as it has proven its ability to keep introducing new features to attract more users and increase transaction volume. Last month, the company’s flagship mobile app received a major upgrade, adding features like bill payment, access to a high-yield savings account, early direct deposit and even purchase offers and rewards. CEO Dan Schulman’s goal is for PayPal to be a one-stop financial tool for individuals.

The competitive position is also enhanced by network effects, where adding more users increases value for everyone. In the last quarter, PayPal processed an incredible $ 311 billion Total Payment Volume (TPV). And it now has 371 million active retail accounts and 32 million active merchant accounts. These are staggering numbers in every way, and they underscore the robustness of the ecosystem that PayPal has built.

The company is always looking for ways to strengthen its payments platform and increase engagement, sometimes using acquisitions to do so. PayPal has already paid $ 4 billion for Honey, an online tool for shopping offers and rewards. And this year alone, it acquired Paidy, a leading Japanese buy-it-now, pay-later platform, for $ 2.7 billion. Rumors have circulated of a possible $ 45 billion merger with Pinterest thus, which would attract users of the digital visual board social media company, who are earlier in their shopping journey, into the PayPal ecosystem. While PayPal ultimately said it wasn’t interested, it hints at the great possibility that Schulman is considering mixing the world of fintech with e-commerce.

Outstanding metrics support assessment

PayPal sports some remarkable financial indicators. In the last quarter, an adjusted operating margin of 26.5% and an adjusted net profit margin of 21.8% demonstrate how solidly profitable this business is. And because the company already has the technological infrastructure to process a large number of transactions, the capital required to continue to grow is minimal. PayPal reinvests 4% of its sales in any period in the business, which is why its free cash flow margin was 17% in the second quarter.

These financial attributes, coupled with the steady and steady growth in the company’s revenue and earnings over the past several years, support PayPal’s futures price-to-earnings ratio of around 47. The stock is also down more than 20% from its recent peak at the end of July. give investors a chance to buy on the weakness.

PayPal is a great company, and I think it’s one of the best stocks to buy with $ 300 today.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.


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