Call them Wall Street’s sweethearts.
Five stocks in the S&P 500 have amassed the highest number of “buy” ratings from Wall Street firms, making them analysts’ most-loved plays.
But of the five — usual suspects Amazon, Alphabet and Facebook as well as Salesforce and PayPal — one looks much more attractive that the rest, market analysts Craig Johnson and Boris Schlossberg said in a Friday interview on CNBC’s “Trading Nation.”
Stocks with the most buy ratings, ranked:
- Amazon: 45 buys
- Alphabet: 42 buys
- Facebook: 42 buys
- Salesforce: 39 buys
- PayPal: 36 buys
“Starting with a caveat that I think that everything is grossly overvalued at this point, I still like PayPal very, very much here because I think it is just an amazing execution story,” said Schlossberg, who is managing director of forex strategy at BK Asset Management and also the co-founder of BKForex.com.
“It’s literally the stock of the decade.”
With strong organic user growth, the rise of its peer-to-peer payment app Venmo and its recent acquisition of online deal-finding app Honey, PayPal is set to “get more and more dominant” in the financial technology space, the strategist said.
“It’s literally the stock of the decade going forward, in my opinion,” Schlossberg said. “As a company, it has become the predominant place for e-commerce and web settlement and is now really building a great platform for person-to-person and business-to-business payments. So, therefore, it is going to produce just [a] tremendous amount of forward growth.”
Still, Schlossberg wasn’t convinced now was the right time for investors to pile full force into PayPal.
“To me, the stock is very expensive,” he said. “I wouldn’t want to chase it here. I’d be a scale-down buyer. I’d buy maybe half a position or a quarter-position here, or just sell puts until I got to about 10 or 15% below current price. But from that point on, I think it could be a very good long-term hold.”
PayPal shares closed at $122.99 on Friday, up over 2% for the day after hitting an all-time high.
“In an age of high tech, it’s the high touch that really matters.”
Johnson, senior technical research analyst at Piper Sandler, wasn’t too put-off by PayPal’s record-hitting trek.
“This is a stock that I do like,” Johnson said, citing a chart of PayPal’s stock since May 2019.
“You are seeing an improvement in the relative strength. It is outpacing the S&P 500. So, I would be a buyer of this stock,” Johnson said.
But that wasn’t the only Wall-Street-loved stock Johnson was watching here.
“A second name that I’d also be buying in here would be Amazon,” he said. “This stock has just broken out of a huge ascending triangle from a chart perspective, and I would be buying this, but I’ve got to wait for a pullback right back to that support level.”
“It’s a little bit short-term overbought from my perspective, but on a pullback toward [$]2,000, I’m definitely a buyer of Amazon here. I think that’d be a great entry point on that stock, too,” Johnson said.
Amazon shares ended trading on Friday at $2,134.87, down less than 1%.
Schlossberg liked Johnson’s Amazon call despite the lofty valuation, adding that “it’s interesting that Craig picked Amazon and PayPal.”
“The thing that unifies those two names is god-like customer service. PayPal customer service has improved tremendously over the last couple of years,” Schlossberg said. “Ironically enough, in an age of high tech, it’s the high touch that really matters, and both of these companies are executing so well on that front that that creates tremendous forward motion, in my opinion, as far as good will goes. That’s why I really like it so much.”