Investors should go bargain hunting in this down market instead of holding cash and waiting for clear signs of a market bottom, says Sarat Sethi – Managing Partner at DCLA.
PayPal shares are historically cheap
A name that he says is offering incredible value after a brutal sell-off this year is PayPal Holdings Inc (NASDAQ: PYPL). At 18 times, this stock is as cheap as it has ever been, Sethi noted on CNBC’s “Power Lunch”.
PayPal has missed earnings estimates in the last three quarters. A lot of that had to do with pull forward during COVID and management issues. But I think PayPal’s got religion now. So, it will increase operating efficiency now.
Earlier this month, PayPal cited macro headwinds as it lowered its revenue guidance for the future that Invezz publish here. But Sethi remains bullish for its recently announced partnerships with Amazon and Apple Inc.
PayPal shares, for the year, are down more than 50% at writing.
SVB Financial Group is great value
Interestingly, Sethi’s second pick for value investments is also in the financial services space. SVB Financial Group (NASDAQ: SIVB) down nearly 70% versus its year-to-date high makes up for a great recovery play for the long-term investors, he noted.
SVB Financial is one of the stars. A lot of venture capitalists in life sciences, early tech, use them to fund their investments. Those companies are now using cash. And rates moved up so high that net interest margin hurt them much faster.
At 14 times, Sethi is convinced that this stock has massive room to the upside.
His constructive view is in line with Wall Street that also rates this financial stock at “overweight” with upside to $331 on average – a 50% premium on its current price.