Three Undervalued Companies: PayPal, Shift4 Payment, and Google
Hello everyone! Today, I'm sharing three companies that I believe are significantly undervalued: PayPal, Shift4 Payment, and Google. Each has important breakthroughs or news that warrant an update. Remember to like the video if you find it helpful!
PayPal's Mobile Wallet Launch in Germany
PayPal has been trading in the $60-$90 range for a while, which can be frustrating. However, patience is key, especially with companies like PayPal. Recently, PayPal CEO Alex Chris announced the official launch of the PayPal mobile wallet in Germany with in-store tap-to-pay and Buy Now, Pay Later (BNPL) features, surpassing 1 million sign-ups.
Competing with Apple Pay
In-store tap-to-pay is similar to Apple Pay, allowing users to pay with their phone without a physical card. However, the Buy Now, Pay Later feature differentiates PayPal, potentially making it a significant competitor to Apple Pay. While PayPal has been dominant in online payments, this expansion allows them to compete in physical retail settings.
Why Germany Matters
Germany is a crucial market for PayPal. It boasts over 100 million users, second only to the United States. More than 90% of online vendors in Germany accept PayPal, significantly higher than the 78% in the US. The launch of the mobile wallet caused a stir in Germany, with the PayPal app reaching the top spot in finance app downloads on both Google Play and the App Store.
Innovation Under Alex Chris
This launch represents a significant step for PayPal, which some consider a "dying company." Under Alex Chris, the company has shown a renewed focus on innovation. This includes directly competing with Apple Pay and offering the popular Buy Now, Pay Later option.
Valuation
PayPal's PE ratio of 15 and Price to Cash Flow of 10 suggest it may be undervalued. While the Buy Now, Pay Later feature can impact cash flow, a Price to Sales ratio of 2 further supports the undervaluation argument. Considering the company's EPS guidance and buyback program, the current valuation looks appealing.
Shift4 Payment: Leadership and Growth Potential
Shift4 Payment, with the ticker FOUR, experienced a slight stock increase recently, but it should have been much higher! Last year, Donald Trump nominated Shift4's CEO and founder, Jared Isaacman, for NASA administrator. The stock price fell when this happened. However, Trump canceled the nomination yesterday, meaning Isaacman is returning to Shift4. That deserves a bigger boost!
Focus on Large Clients
Shift4 Payment specializes in payment processing for large companies like hospitals. This focus provides a strong moat, as these clients are highly dependent on Shift4's services and its ability to provide customized solutions, something that companies focusing on smaller businesses can't do.
Valuation and Growth
While a PE ratio of 33 might seem high, Shift4's expected growth rate of over 30% in the coming years suggests that its PEG ratio is not expensive at all. Its Price to Cash Flow of 13 and Price to Sales ratio of 1.87 further support this view. Revenue and earnings are projected to increase significantly. If Shift4 can maintain a higher average growth rate than 13% it could be a good investment for the future.
Google: Ignoring Analyst Negativity
A recent article suggested that Alphabet's stock could drop by 25% if Google Chrome is forced to divest. This is pretty standard for any company and doesn't seem that insightful. The argument is that since Chrome accounts for over 30% of Google Search's ad revenue, and if Chrome is bought by a competitor like Microsoft's Bing, it would threaten Google's default search engine.
Counterarguments
This argument is flawed. If Chrome is no longer associated with Google, users might switch to a different browser anyway. Also, even if Chrome were sold, Google Ads wouldn't lose 35% of its revenue, because people can simply go to Google Search and search for stuff like normal.
AI and Advertising
Another bearish argument suggests that Google's focus on AI will disrupt its advertising revenue. However, Google's progress in AI can likely enhance its advertising capabilities instead of undermining them. Google has been showing a lot of really exaggerated and ridiculous features for Google, so why would that be true?
Undervaluation
Google's PE ratio is about half of Apple's, while its growth rate is comparable. This may seem like it's a good thing, but if Apple gets affected by tariffs it may be ruined. It also seems like Apple has a lot more trust from people than Google does. Despite negative headlines, Google is still significantly undervalued, with people maybe not wanting it because of lack of trust.
{# 
{# 
{# 
{# 
{#