Offering a Payment Platform with Momentum

This week’s Alpha Algorithm recommendation is a Silicon Valley start-up that was initially launched by Peter Thiel, the first large investor in Facebook, Inc. (FB), and Red Hoffman, the founder of the professional networking site LinkedIn.

Based in San Jose, California, PayPal Holdings, Inc. (PYPL) offers an online payment solution that allows customers to pay and get paid, withdraw funds and hold balances in their PayPal accounts. Its payment platform includes PayPal, PayPal Credit, Venmo and Braintree products.

PayPal Holdings (PYPL) versus the S&P 500 year to date.

Nine Top Investment Strategies Betting on PayPal Holdings (PYPL)

1. Hedge Fund Alpha

Based on publicly available disclosures, successful hedge fund managers are investing in the stock.

2. Hedge Fund Gurus

The stock is one of the top U.S.-listed equity positions reported on Form 13F by select hedge funds with concentrated top holdings.

3. Goldman Sachs Hedge Fund Index

The stock is part of the Goldman Sachs Hedge Industry Index, which tracks an equal-weighted index of the 50 most-frequently held U.S. companies selected from the portfolios of hedge funds.

4. Billionaire Bet

The stock is one of 30 U.S. companies tracked in an equal-weighted index selected from the portfolios of 10 asset managers with a personal net worth of at least $1 billion.

5. Exponential Technologies

The stock is part of a strategy that invests in nine different fields deemed to be vast growth “exponential technologies”: big data and analytics, nanotechnology, medicine, networks, energy and environmental systems, robotics, 3-D printing, bioinformatics and financial services.

6. IBD Top Fifty

The company is a Top 50 stock based on Investor’s Business Daily’s proprietary trading formula to identify 50 stocks that meet one of seven different catalysts. The “CAN SLIM” strategy identifies companies with either fundamental (improving earnings or new product) or technical (upward stock move on strong volume) catalysts.

7. Large-Cap Growth

The stock is among the top 50 large-capitalization U.S. growth stocks generated through a rigorous 10-factor fundamental screening process.

8. IPO Index

The strategy tracks a market-cap-weighted index of the 100 largest U.S. initial public offerings (IPOs) over the first 1,000 trading days of each stock. Stocks must pass additional quantitative screens as well.

9. Insider and Analyst Sentiment

It is one of 100 stocks chosen from the S&P 1500, based on positive sentiment among those “insiders” closest to a company’s financials and business prospects, such as top management, directors, large institutional holders and the Wall Street research analysts who follow the company

Recommendation

Buy Pay Pal Holdings (PYPL) at market today and place your stop at $49.20.

If you want to play the options, I recommend the PYPL October $52.50 calls (PYPL171020C00052500), which last traded at $4.45 and expire on Oct. 20.

Portfolio Update

You were stopped out of NVIDIA (NVDA) on July 3 at $141.60 for a 25.25% gain.

With two of your blue-chip positions — Johnson & Johnson (JNJ) and Proctor & Gamble (PG) — technically oversold, I am recommending the two following options to take advantage of a coming bounce.

Buy the JNJ October $130 calls (JNJ171020C00130000), which last traded at $6.25 and expire on Oct. 20.

Buy the PG October $87.50 calls (PG171020C00087500), which last traded at $2.29 and expire on Oct. 20.

Sincerely,

Nicholas A. Vardy