5 NASDAQ Stocks with Biggest Upside

In this article, we will take a look at the 5 NASDAQ stocks with biggest upside. To see more such companies, go directly to 10 NASDAQ Stocks with Biggest Upside.

5. Paypal Holdings Inc. (NASDAQ:PYPL)

Number of Hedge Fund Holders: 86

Paypal Holdings Inc. (NASDAQ:PYPL) ranks 5th in our list of the best NASDAQ stocks with upside potential according to the media. Paypal Holdings Inc. (NASDAQ:PYPL) recently made headlines after the company launched a U.S. dollar-denominated stablecoin, PayPal USD (PY-USD).

Alex Chriss was recently named as Paypal Holdings Inc. (NASDAQ:PYPL)’s president and CEO.

RiverPark Large Growth Fund made the following comment about PayPal Holdings, Inc. (NASDAQ:PYPL) in its Q2 2023 investor letter:

“PayPal Holdings, Inc. (NASDAQ:PYPL): PayPal shares were a top detractor in the quarter despite reporting better than anticipated 1Q earnings and raising guidance for the remainder of 2023. Revenue of $7 billion grew 9% year over year, an acceleration from the prior year and quarter. EPS of 1.17 grew 33% year over year on better cost discipline leading to better operating margins. The disappointment was centered around weaker gross margins, as unbranded checkout, which has lower gross margins, accelerated faster than branded checkout. Management anticipates this trend to continue and therefore guided to lower gross margins for the remainder of the year. Despite the gross margin headwind, operating margins continue to expand due to expense discipline.

PayPal is the most accepted digital wallet – with almost triple the acceptance of Apple Pay, the number two digital wallet – providing the purest exposure to the secular growth in ecommerce-driven digital payments. PayPal is also a key beneficiary of consumer-to-consumer payment trends through its Venmo peer-to-peer (P2P) payment service. With a 1Q non-GAAP operating margin of 23%, PYPL also has significant margin expansion potential given that competitors Adyen, Visa and Mastercard have 50%-65% operating margins. We believe the combination of the secular growth of eCommerce and P2P payments, along with expanding operating leverage and the strategic use of the company’s significant and growing cash balance should fuel at least a high teens earnings growth rate over the next five years. This, to us, presents an excellent risk/reward given that PYPL trades at a below market multiple.”