In today's issue...

• The stock pick of the week
• Why it deserves your attention
• What could go wrong

And More!

⏳ Read Time: <3 minutes

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Dear Reader,

Imagine a world where financial transactions were once bogged down by clunky bank processes and long waits. Then, a company came along that changed everything—sending money to a friend, shopping online, or paying for services became as simple as a few taps. This company didn’t just innovate; it transformed the way millions handle money, fueling the rise of e-commerce as we know it.

For years, it was everyone’s darling—an indispensable part of the online shopping boom. But, as often happens with early innovators, it’s fallen from grace recently. Overshadowed by newer players and left grappling with investor skepticism, this once-reigning giant is now fighting to reclaim its position in a rapidly evolving digital world.

Today's stock pick is that company—the one that pioneered digital payments and helped shape the future of e-commerce, now poised for a comeback as it adapts, streamlines, and refocuses for renewed growth and profitability.

Introducing PayPal (NASDAQ:PYPL), the trailblazer that revolutionized online payments—and might just be getting ready for a second act.

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I hope you’ve had a great week. It's the second Sunday of the month, and that means it’s... Stock Pick time! So, grab a cup of coffee and let’s talk about PayPal.

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PayPal at a Glance

PayPal has been on a rocky ride. Once trading at 16 times Enterprise Value to Sales, its multiples have shrunk by 6 times. Yet, despite the contraction, PayPal's operating income has surged by 144% in the past two years.

Sure, PayPal may not be the cool kid on the block anymore. It’s not the explosive growth story it once was, but the narrative has shifted to one of solid, steady growth and improving profitability—a crucial point for a company that has been mistreated lately.

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Why PayPal Deserves Your Attention

After its split from eBay, PayPal faced rising competition and pressure from activist investors. But under new CEO Alex Chriss—known for strategic moves like Intuit’s acquisition of Mailchimp—PayPal is undergoing a transformation. It’s now aiming to become a broader player in the commerce world, not just in payments.

PayPal is deepening its presence in global ecosystems through partnerships with companies such as Amazon and Shopify. The key question remains, though: Can it build a "moat" as Chriss envisions, or will the competition outpace it? In a crowded FinTech field, PayPal’s deep connections with consumers and merchants might give it the edge it needs.

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MonkStreet’s Take on PayPal

Now, let’s talk numbers. According to MonkStreet, our science-based, quantitative tool for analyzing stock fundamentals, PayPal scores a solid MonkScore of 94/100. This suggests that PayPal is highly likely to outperform the market over the next three years.

Here’s the breakdown across the five key factors that we use to score each company:

• Profitability: Very Good (87)
• Health: Very Good (78)
• Shareholder Friendliness: Very Good (75)
• Growth: Very Good (72)
• Valuation: Good (57)

As you can see, PayPal doesn’t have a single standout feature, but it scores well across the board. This consistency across multiple areas increases its chances of beating the market. From profitability to shareholder friendliness, there’s a lot to like here.

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What Could Go Wrong?

However, it’s not all smooth sailing. PayPal faces fierce competition, especially from Apple Pay, whose ecosystem integration makes it a formidable rival. Shopify and Block are also vying for market share in the digital payments space.

And while PayPal has been diversifying, their core business—payment processing—the question remains as to wether PayPal can continue to dominate in its core business while also expanding into uncharted territory.

The bigger picture shows PayPal’s strengths: transaction scale, a willingness to experiment, and the power of the network effect. But with competitors breathing down its neck, can it maintain this advantage? Only time will tell.

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Why MonkStreet Ranks PayPal So High

This week’s stock pick highlights a company with untapped potential for continued improvements in efficiency and profitability but out of favor in terms of popularity in Wall Street circles.

And this is where MonkStreet comes in. Imagine having a tool at your fingertips that dives deep into stock fundamentals and lets you cut through the noise, focusing purely on the data that matters. That’s exactly what MonkStreet does. It’s not just another stock analysis platform—it’s designed for long-term investors who want to see the numbers behind the companies they invest in, without the emotional rollercoaster of market hype.

MonkStreet ranks PayPal high not because it’s trending, but because the data shows strong profitability, sound financial health, and solid long-term growth potential—backed by the same quantitative principles that have driven market outperformance for years.

Whether you're interested in PayPal or curious about other potential winners, MonkStreet gives you an edge by delivering objective insights and letting the numbers guide your decisions. It’s designed to help you identify opportunities where others may see uncertainty.

If you're eager to explore how PayPal—and other stocks—stack up based on MonkStreet’s science-backed analysis, click here to let me know, and I’ll send you the link for you to try as soon as the platform is ready for debut in the coming weeks.

If you’ve found value in this stock pick, it would mean a lot to me if you shared this newsletter with others.

And, if someone forwarded this to you and you like what you are reading, you can sign up free at https://convert.monk.st.

Have a nice week and happy investing,

The Investing Monk