"The rise of artificial intelligence has distorted stock market valuations, pulling them far from underlying fundamentals. Traders have poured money into AI-related names, driving up prices on the assumption that growth rates will accelerate endlessly without setbacks. This frenzy has left the broader market looking overextended, with the S&P 500 trading at elevated multiples despite uneven economic signals. Yet amid the hype, overlooked quality companies persist - those with solid growth trajectories trading at discounts that scream opportunity."
"With a price-to-earnings-to-growth (PEG) ratio of just 0.69, PayPal trades at a steep discount to fair value - anything under 1 signals undervaluation when growth is factored in. This low multiple reflects temporary pessimism rather than structural flaws, especially when paired with analysts' projections for long-term earnings per share (EPS) growth of 12% annually. That double-digit growth forecast stems from PayPal's ongoing investments in innovation, like its Fastlane one-click checkout tool and Braintree integration for developers."
"As a cornerstone of online transactions, PayPal stands out for processing billions in payments annually through its vast ecosystem of merchants and consumers. Once a high-flyer in fintech, it has faced headwinds from slowing growth and competition, but recent quarters show signs of stabilization. These moves aim to recapture market share lost to rivals such as Apple Pay and Stripe. In fiscal 2025, transaction volumes grew modestly, but margins improved as the company trimmed costs and focused on high-value users."
Artificial intelligence hype has pushed stock valuations away from fundamentals, with traders favoring AI-related names and the S&P 500 trading at elevated multiples despite uneven economic signals. Quality companies trading at discounts remain available, offering resilient business models and potential compounding returns. PayPal, Pinterest, and Micron are identified as overlooked long-term opportunities. PayPal processes billions in payments and has stabilized after growth headwinds, trading at a PEG of 0.69 with analysts projecting 12% annual EPS growth. PayPal's innovations such as Fastlane and Braintree, plus cost trimming, improved margins and focused growth on high-value users in fiscal 2025.
Read at 24/7 Wall St.
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