Are PayPal and Meta Undervalued, and Why Is Gold Stagnating?

TL;DR

PayPal and Meta appear undervalued based on the valuations and business figures discussed, though the speaker does not claim that either stock has reached an absolute bottom. PayPal hit another 52-week low despite projected 2022 revenue of $29 billion, versus $17 billion in 2019, while Meta traded at a PE ratio of 15. Read on for the comparisons behind these views and the outlook for smaller stocks, loans, and gold.

Transcript

oh this is bad and it is getting ugly yes folks we gotta talk about a whole lot that's going on this market i gotta talk about several different stocks in this video here today i'm even in this video believe it or not i'm gonna share my perspective on gold in this video okay yes you heard me right gold uh in recent events that have happened out the... Read More

Key Insights

• 🎚️ Paypal's stock is approaching a potential bottom as its valuation reaches unsustainable levels.
• ❓ Meta's stock offers a compelling investment opportunity despite concerns over recent earnings.
• 👲 Mid-cap and small-cap stocks present attractive prospects for potential growth.
• 🚗 Positive trends in home loans, car loans, and auto loans suggest a recovering economy.
• 🏅 Gold's performance has been lackluster due to the younger generation's preference for Bitcoin.
• 😘 Valuations in the market are currently at unsustainably low levels, indicating a potential bounce.
• 🥡 The video emphasizes the importance of taking advantage of irrational pricing in the market.

Questions & Answers

Q: Why does the speaker believe PayPal stock is approaching a bottom?

PayPal hit another 52-week low and was valued at a forward PE of about 25, which the speaker considers unusually low for the company. He does not claim that the current price is the absolute bottom, but says PayPal is getting close because such low valuations cannot remain sustainable indefinitely.

Q: How does PayPal’s current valuation compare with its usual valuation range?

The speaker says PayPal would usually trade at a forward PE between 35 and 45. He considers valuations above 45 increasingly rich and describes a forward PE of 25 as silly pricing.

Q: How have PayPal’s revenue expectations changed since 2019?

PayPal generated $17 billion in revenue in 2019, while the average analyst estimate cited for 2022 was $29 billion. That represents more than $12 billion in additional expected revenue even though the stock was trading below its July 7, 2019 price of $120 per share.

Q: How do PayPal’s earnings compare with 2019?

PayPal recorded earnings per share of $2.07 in 2019. The cited average analyst estimate for 2022 was $4.78 per share, meaning expected EPS had more than doubled while the stock price remained below its 2019 level.

Q: Why does the speaker consider Meta stock a compelling value?

Meta was trading at a PE ratio of 15 despite its favorable business model and expected revenue growth. Although the speaker disliked the company’s earnings guidance, he still describes the stock’s valuation as reaching silly levels and considers it a phenomenal deal.

Q: What do low mid-cap and small-cap valuations suggest?

The analysis describes mid-cap and small-cap stocks as trading at unsustainably low levels. It argues that these depressed valuations could produce a market bounce because pricing cannot remain irrationally low forever.

Q: What do home-loan and auto-loan search trends indicate?

Google Trends data for home loans, car loans, and auto loans showed promising signs of recovery. The analysis treats those trends as a positive indicator for the broader economy.

Q: Why does the speaker think gold has performed poorly?

Gold’s price had remained relatively stagnant over the period discussed. The speaker attributes part of that lackluster performance to younger people favoring Bitcoin over gold as a hedge against dollar devaluation.

Summary & Key Takeaways

• Paypal stock has hit a new 52-week low and is trading at a forward PE of 25, signaling a potential bottom. The stock's current valuation is considered silly and unsustainable in the long run.

• Meta's stock is also at a low PE ratio of 15, despite its favorable business model and expected revenue growth. The stock's current valuation is deemed to be a steal.

• Mid-cap and small-cap stocks are trading at unsustainably low levels, indicating a potential bounce in the market. These valuations are not expected to last for long.

• Google Trends data for home loan, car loan, and auto loan show promising signs of recovery, indicating a positive outlook for the overall economy.

• Gold's performance has been lackluster, with its price remaining relatively stagnant over the years. The younger generation tends to favor Bitcoin over gold as a hedge against the devaluation of the dollar.