1 Fintech Stock to Buy Hand Over Fist and 1 to Avoid

PayPal (NASDAQ: PYPL) and Block (NYSE: SQ) are two of the most popular fintech stocks today. Both have market caps of about $50 billion to $60 billion. Both have strong histories of growth. And both have plenty of growth potential.

One stock, however, is a much better buy today.

PayPal bets $5 billion on itself

PayPal the company does not need much introduction. Spun off from parent company eBay in 2015, the company has amassed more than 400 million global users. From e-commerce transactions to paying back friends, almost everyone has either used PayPal personally or knows someone who has.

PayPal the stock has a more volatile history.

After its split from eBay, PayPal stock zoomed in value, from $40 per share to $300 per share in just three years. Since those all-time highs, however, the share price has cratered. PayPal shares now trade at 2017 prices.

PYPL Chart

PayPal stock now trades at just 2.2 times sales — a popular valuation metric for growth stocks. That’s the cheapest shares have ever been.

Management has noticed the decline in valuation, opting to invest $5 billion in share repurchases. By buying back its own stock at discounted prices, the company hopes to double down on a turnaround.

There’s only one problem: PayPal has been here before. The company has already spent $15 billion in share repurchases since going public in 2015. These buybacks were executed at prices much higher than today, meaning they destroyed shareholder value.

PayPal isn’t going anywhere as a company, but don’t be fooled into thinking the cheap valuation multiple is a clear buy signal. The reason the shares are cheap is that the company’s best days of growth probably are behind it. In fact, its user base has been shrinking the past two years.

The shares might be a worthwhile value at today’s depressed prices, but there’s a better choice for growth investors — a stock with a turnaround story already in action.

This is the fintech stock worth betting on

Block has faced its own struggles. The company — traditionally a payment processor, but more recently an investor in other areas like the…


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