Is it time to invest in PayPal after Jim Cramer’s buy recommendation?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Oct 14, 2021
  • PayPal shares spiked more than 4% after Jim Cramer said investors should consider buying the stock.
  • The Mad Money host told CNBC PYPL gives investors exposure to neo banks.
  • PayPal shares are up 15% this year, despite falling more than 13% since the 23rd of July.

On Thursday, PayPal Inc. (NASDAQ:PYPL) shares advanced more than 4% after Mad Money host Jim Cramer told CNBC investors should consider buying the stock. Cramer recommended PYPL alongside SoFi Technologies Inc. (NASDAQ:SOFI) saying they provide access to neo banking. 

He said investors could turn to “nouveau banks” if Wall Street bank earnings fall short of high expectations. 

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Cramer told CNBC:

If the rest of them go like JPMorgan … then it’s possible we could have still [have] one more exodus from the straight financials and one more love affair with the Fintechs.

PayPal shares are now up 15% this year and more than 315 over the last 12 months following Thursday’s spike.

PayPal’s growth outlook

From an investment perspective, PayPal shares trade at a steep P/E ratio of 65.21, making the stock less attractive to value investors. However, the company offers exciting growth prospects to investors looking for long-term investments.

Analysts expect the online payments giant’s earnings per share to grow by 71% this year before rising at an average annual rate of more than 24% over the next five years. Therefore, growth investors could find the stock exciting ahead of its compelling growth story.

Source – TradingView

The rebound seems poised to continue

Technically, PayPal shares appear to have recently bounced back to avoid sleeping into the oversold territory of the 14-day RSI. However, the stock still trades several levels below the 100-day moving average and has room left to run before reaching overbought conditions.

Therefore, investors could target extended gains at about $278.28, or higher at $292.39. On the other hand, if the stock pulls back prematurely, it could find support at $255.09, or lower at $240.91.

It could be time to buy PayPal shares

In summary, although the PYPL stock price spiked more than 4% on Thursday, the shares still trade more than 13% off their July highs, leaving room for the rebound to continue. 

Moreover, whilst the stock price seems steeply valued at the current P/E ratio, the company offers exciting growth prospects, making it perfect for investors willing to overlook short-term turbulence.

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