Returning to a Big Winner with Momentum

This week’s Alpha Algorithm recommendation returns you to a Silicon Valley start-up launched during the dotcom boom.

PayPal already has been a big performer in your portfolio this year. Recall that you booked a 35% gain in the stock after hitting your stop on Nov. 29. Although the stock pulled back sharply during the recent rotation out of the tech sector, Paypal has stabilized and resumed its uptrend over the past two weeks.

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

12 Top Investment Strategies Betting on PayPal Holdings (PYPL)

1. Momentum Factor

The stock is one of the top 120 large- and mid-cap U.S. stocks exhibiting relatively higher price momentum, as measured by a specific factor which has historically driven a significant part of companies’ risk and return.

2. Large-Cap Momentum

The stock is part of a major hedge fund’s systematic strategy that invests in large- and mid-cap U.S. companies with positive momentum and that rank in the top third of total return over the prior 12 months, excluding the last month.

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 CAN SLIM trading formula. 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. Large-Cap Alpha Growth

The company has been chosen as part of an alpha-seeking index that selects and weights growth stocks from the S&P 500 Growth Index. The proprietary methodology uses price appreciation — among more traditional factors — and weights the constituents based on their respective growth scores.

10. Large-Cap Alpha Core

The stock is one of a tiered, equal-weighted index of large-cap stocks selected from the S&P 500 expected to outperform the broader large-cap space based on an intricate methodology of ranking stocks according to their recent performance.

11. Large-Cap Dynamic Growth 

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

12. Spin-Offs

The company has spun away from its parent firm in the last four years. Spin-offs have a solid history of outperforming the broader market.

Recommendation

So buy PayPal Holdings, Inc. (PYPL) at market today and place your stop at $62.00.

If you want to play the options, I recommend the PYPL April $72.50 calls (PYPL180420C00072500), which last traded at $6.25 and expire on April 20.

Portfolio Update

Sincerely,

Nicholas A. Vardy