Just released: the 3 best growth-focused stocks to buy in February [PREMIUM PICKS]

Our goal here is to highlight some of our past recommendations that we think are of particular interest today, due to a combination of business performance and potentially attractive share valuation.

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The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

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)

  • Its Q3 earnings showed revenues increasing by 6% at constant currency.
  • While the growth rate decelerated from the previous quarter, the company is focusing on profitable, “durable” growth, rather than a higher proportion of low margin processing volumes.
  • Its enterprise payments platform Braintree saw volume decline to 11% to 19%, but is “meaningfully contributing” to transaction margin dollar growth (an important profit measure) which grew 8% to $3.7bn.
  • The company has cut costs in recent years as part of an efficiency drive, helping operating margins move higher (which were 18.8% in the quarter). But as the business scales, further drastic cost cutting shouldn’t be necessary to support margin growth.
  • While the share has risen by 39% in the past 12 months, it’s currently trading at 17x trailing earnings, which still seems like a reasonable valuation for a growing, highly profitable business returning cash to its investors.

“Best Buys Now” Pick #2:

Redacted

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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.

Mark Stones and Ian Pierce own shares of PayPal. The Motley Fool UK has recommended PayPal. 

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