While many stocks had a strong 2023, some didn't. Unfortunately for PayPal (PYPL -1.61%) investors, that trend persisted in 2021 and 2022. PayPal's stock has lost value for three straight years, but there are some strong indicators pointing toward a recovery year in 2024. So, if you're looking for a great stock pick for 2024, PayPal is shaping up to be one of the best.

1. PayPal is starting from a low valuation

Part of the reason many of the fabled "Magnificent Seven" stocks did well in 2023 is that they entered the year at a low valuation. Sometimes, the market gets too pessimistic about businesses, and all it takes is one solid quarter to kick-start a new wave of growth.

Meanwhile, PayPal stock is still trading at unbelievably low levels, making the stock appear attractive.

PYPL PE Ratio Chart

PYPL PE Ratio data by YCharts

Compared to the S&P 500's forward price-to-earnings ratio of 19.2, PayPal trades at a significant discount to the broader market. Essentially, investors are saying PayPal is a below-average business in the index, which is a huge mistake.

2. Stock buybacks will boost earnings-per-share growth

Because PayPal's stock is so undervalued, management has been doing the right thing: aggressively repurchasing shares. By taking advantage of the cheap stock price, PayPal has repurchased nearly 5% of its outstanding shares in just one year.

That provides a huge earnings-per-share boost, as the business only needs to grow net income at about 5% to provide investors with a market-beating growth pace. While PayPal's net income growth has been a bit inconsistent as of late, it's working toward returning to the highs achieved in 2021.

PYPL Net Income (TTM) Chart

PYPL Net Income (TTM) data by YCharts

If PayPal can provide solid and sustainable earnings growth, it will provide investors with market-beating growth.

3. New leadership is in the building

The third quarter marked the start of new CEO Alex Chriss. Chriss has taken his time getting to know the business, and on PayPal's Q3 conference call he noted one item in particular that investors must know: "We will become leaner, more efficient, and more effective, driving greater velocity, innovation, and impact for customers." 

Becoming more efficient should allow PayPal to grow its net income consistently while participating in an aggressive share buyback program. We'll likely learn more about Chriss's strategy in PayPal's Q4 report (expected on Feb. 7), but he has the right focus for a business that is no longer considered focused on growth.

4. PayPal can provide sustainable growth

While increasing efficiency and repurchasing shares is one way of increasing a company's earnings-per-share figure, so is growing revenue. Despite the market's indications, PayPal has reliably grown its revenue over the past year.

While it wasn't at the lightning pace it had been growing earlier, PayPal has increased revenue by at least 6.7% over the past two years. If PayPal could repurchase shares at its current rate, maintain its margins, and grow at the same pace, its earnings would outpace the market.

However, with all three events happening concurrently, don't be surprised to see PayPal grow its earnings consistently in the 15% to 20% range until the market recognizes PayPal's stock is investment-worthy and starts scooping it up again.

Wall Street hasn't done that yet, so you have an opportunity to get in now before bigger firms do. PayPal is a sleeping giant and a refreshing investment in a market full of highly valued stocks.