Premium content from Motley Fool Share Advisor UK
Our monthly Fire Best Buys Now are designed to highlight our team’s three favourite, most timely Buys from our growing list of growth-focused Fire recommendations, to help Fools build out their portfolios.
“Best Buys Now” Pick #1:
PayPal (NASDAQ:PYPL)
- PayPal is the global leader in digital payments.
- Its Q3 earnings were mixed, with the company reporting 9% sales growth at constant currency and 20% adjusted EPS growth, both ahead of guidance
- However, it has lowered the revenue growth forecast for the fourth quarter, as growth in the legacy PayPal checkout business wasn’t as “elevated”as the company planned.
- The longer-term strategy seems reassuring, with new CEO Alex Chriss aiming for “high-quality customer growth and profitable revenue growth”.
- It’s also a positive that the company is managing its cost structure, which it believes is too high, partly stemming from acquisitions over the past few years resulting in lots of duplication of work. The efficiency drive should boost margins and cash flow in the medium term.
- With the share price down by some 23% in the past 12 months, it’s currently trading at 12x expected earnings for 2023, which seems like a reasonable valuation for a growing, highly profitable business returning cash to its investors.
