Is this one of the best stocks to buy in March?

This fintech giant lost investor popularity and its shares plummeted. But is it on the verge of a big comeback and is it a stock for me to buy more of?

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I’m on the hunt for some of the best stocks to buy right now. After all, even with the upward trajectory we’ve seen these past couple of months, many shares are still trading at depressed valuations. And there are still several positions in my portfolio that have yet to recover.

However, of all my businesses, PayPal (NASDAQ:PYPL) currently stands out from the crowd. In the face of a shifting economic landscape as well as unsuccessful strategic planning from management, the US stock’s down over 70% since March 2021. This downward volatility has been so extreme that shares are now trading at the same level as in 2017!

Is this new valuation justified, or is a stellar comeback just around the corner? Let’s explore.

A pending turnaround?

Following the mishaps of various aggressive investments, including the idea of turning PayPal into a ‘superapp’ for finance, the company started feeling the heat from activist investors. And in September 2023, long-time CEO Dan Schulman stepped down.

It’s sad to see the man arguably behind PayPal’s success over the last decade depart. However, in the face of intensifying competition and an evolving fintech industry, fresh blood may not be so bad after all. His successor, Alex Chriss, has already started making waves.

After only five months on the job, he’s already replaced swathes of upper management and started simplifying the group’s operational structure. This ultimately led to around 2,500 jobs being axed, which is obviously unfortunate. But it’s led to underlying margin expansion, which now sits at 23.3% versus 21% in 2017.

The number of active accounts at the end of 2023 did drop by around 2% year-on-year. However, with Chriss focused on pursuing quality over quantity, this may not be a major concern for now.

A closer inspection reveals the drop-off stems primarily from non-merchant accounts that weren’t frequently engaging with the platform. As such, even with this slip, sales were still up 8% for the year, with the number of transactions rising by 12%.

What’s holding PayPal back?

The figures are a far cry in terms of growth versus a few years ago. But they’re a significant improvement compared to figures reported over the last few quarters. Despite this, shares are trading at a forward price-to-earnings (P/E) multiple of just 12.3. That’s the cheapest PayPal shares have traded since going public.

It seems most investors have given up hope that PayPal can return to its former glory. With the competitive landscape now filled with alternative payment processing solutions, whether PayPal can hold up in the long run remains unclear, especially when battling against the likes of Apple and Alphabet.

It’s too soon to tell whether Chriss’ new strategy will be the key to the firm’s ultimate turnaround. But overall, I like what I’ve seen so far. And suppose he can continue streamlining operations while improving the quality of customer accounts through stickier relationships. In that case, PayPal may have just become an underdog success story.

It could take quite some time before the group musters rapid growth once more. But at the current valuation, PayPal looks like it might be among one of the best stocks to buy now from my portfolio. And that’s why I intend to load up on my position.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Zaven Boyrazian has positions in PayPal. The Motley Fool UK has recommended Apple and PayPal. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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