Despite the market notching new all-time highs, I remain a committed stock buyer. There are multiple companies that are still attractively priced for their growth, and I took advantage of that earlier this month when I purchased shares of PayPal (PYPL 2.90%) and The Trade Desk (TTD 1.67%).
So why did I purchase shares of these two? Read on to find out.
1. PayPal
PayPal (PYPL 2.90%) may be the most misunderstood stock in the market. One of my top reasons to buy it is its criminal undervaluation.
PYPL PE Ratio (Forward) data by YCharts
For a stock to trade this low, it normally isn't growing or caught up in an unsatisfactory trend. However, with PayPal at the forefront of the digital payment trend and revenue increasing at a 9% pace in Q4, it doesn't fit either of these categories.
With PayPal being undervalued and still growing, it's primed for a strong upside when the market gives it an ounce of respect. But when that will occur is anyone's guess.
Meanwhile, all signs point to significant change going on at PayPal. In January, new CEO Alex Chriss unveiled six innovations to modernize PayPal's ecosystem to attract more customers. These changes should improve the business and give investors more reasons to own the stock.
PayPal's undervaluation and solid business make it a great stock to buy more of now. Still, investors must be patient as the current trend is heavily against the company.
2. The Trade Desk
The situation has changed drastically from when I bought The Trade Desk's stock earlier this month. I picked up shares for less than $70, but thanks to a strong Q4 earnings report, the stock trades for around $90. So, would I still buy it now?
The Trade Desk is a leader in the buy side of ad buying. It equips advertisers with the tools they need to run successful ad campaigns by analyzing viewers' preferences and then increasing or decreasing its bid price to increase conversion rates.
The company blew away Q4 revenue expectations by growing its revenue by 23% to $606 million -- a $26 million beat. The company's profitability also improved, with earnings per share rising from $0.15 last year to $0.20 this year. Guidance for Q1 was also strong, with revenue expected to increase by 25% to $478 million.
These fantastic results caused the stock to spike around 20% the following trading day, and the stock now trades for 25 times sales.
TTD PS Ratio data by YCharts
This is far more expensive than the level at which I purchased shares and nearly the same as its revenue growth level. As a result, the stock is a bit too expensive for my taste right now.
I'm content with holding my shares, as The Trade Desk operates as an industry leader in an important segment. Should The Trade Desk's revenue accelerate in Q1 or its price drop, I'd rethink my hold stance. But as of right now, The Trade Desk isn't an attractive buy.
