5 Best Spring Stocks To Buy Now

3. PayPal Holdings, Inc. (NASDAQ:PYPL)

Number of Hedge Fund Shareholders: 102

PayPal Holdings, Inc. (NASDAQ:PYPL) is another stock that’s lost a lot of hedge fund ownership in recent years. 160 funds were long PYPL in Q3 of 2022, which had fallen to just 102 by the first quarter of this year. With the pandemic-related e-commerce tailwinds having subsided and mounting concerns about consumer spending in the near-term, it’s not surprising that many funds have been looking to park their money elsewhere for now.

That said, PayPal Holdings, Inc. (NASDAQ:PYPL) is starting to look more attractive from a valuation perspective, with the stock now being 80% off its all-time highs. It may no longer be a high-growth stock, forecasting for just 7% revenue growth in Q2, but it does generate a solid amount of free cash flow, with a FCF yield that stands at 6%.

The Renaissance Large Cap Growth Strategy likes the easier upcoming comps for PayPal Holdings, Inc. (NASDAQ:PYPL), as it discussed in its Q4 2022 investor letter:

“Another underperformer in the quarter was PayPal Holdings, Inc. (NASDAQ:PYPL). Despite reporting solid third quarter operating results and announcing new payment agreements with both Apple and Amazon.com, the company guided for a slowdown in e-commerce activity, partly reflecting weakened consumers who are dealing with heightened inflation. However, we still expect growth in PayPal’s core payments platforms to improve in upcoming quarters, driven by easier year-over-year comparisons.”