Look around you. Digital trends are shaping the economy. The rise of fintech companies is particularly impressive.

The blending of financial services and technology has created many companies that attract investors interested in rapid growth. However, there is a clear leader in this subsector that has already proven its value and is trading at a bargain price.

Here is an incredibly cheap Fintech shares buy now.

Positive trends

Investors should consider PayPal (PYPL 0.03%) into their portfolios. Shares of this electronic payments leader are currently trading 79% below their July 2021 high as the market is disappointed with slower growth.

But I think these worries are a bit overblown. PayPal reported 8% year-over-year revenue growth in the second quarter (ended June 30), which is still very good. This is due to total payment volume (TPV) increasing 11% to $417 billion and the number of transactions increasing 8%.

PayPal will continue to benefit from the proliferation of cashless transactions, a powerful tailwind that increases convenience and security for consumers and merchants. It still has a long way to go to take market share from cash and other paper-based payment methods.

One way PayPal is driving growth is by introducing new features. CEO Alex Chriss, who has been in the job for less than a year, has focused on these innovations. For example, earlier this year the company introduced Fastlane, a one-click checkout, and Smart Receipts, a tool that allows merchants to make recommendations and offer rewards.

This seems to encourage engagement. In the last 12 months, the average user has transacted through PayPal nearly 61 times, up 11% from Q2 2023. This number has been steadily increasing over the past few years.

This is not reflected in the poor performance of the stock, but PayPal faces minimal financial risks. The company is consistently profitable, which is something that cannot be said of many fintech companies.

The balance sheet should give shareholders peace of mind. Yes, PayPal has $12.2 billion in debt on its balance sheet, but that is more than offset by $18.3 billion in cash, cash equivalents, and investments.

Keeping the perspective

In conjunction with PayPal’s slower growth, the market may also be concerned about the hyper-competitive nature of the payments industry. In recent years, the popularity of Apple PayThe emerging digital wallet is a popular payment option for iPhone users around the world, making it a highly lucrative consumer group.

On the merchant side, PayPal’s Braintree, whose TPV values ​​have risen rapidly, is not immune to competition. It has to compete with companies like Adyen and Stripe for example.

But PayPal must be credited with the fact that its huge, two-sided platform of Network effectsAs of June 30, there were 429 million active accounts using the service from both merchants and consumers. As the user base grows, it immediately becomes more valuable for all parties involved.

This is an incredibly cheap stock, trading at a price-to-earnings ratio of 15.1. Investors will be hard-pressed to find growing companies like this that have competitive advantages and are financially sound and can trade at such a low valuation multiple.

I mentioned earlier that PayPal is extremely profitable. It generates tons of free cash flow, expected to reach $6 billion in 2024. In a smart move, management is aggressively using those proceeds to buy back shares. That’s a clear sign that they think the stock is cheap right now.

Knowing more about PayPal should make the average investor want to own this company.