Editor’s Note
This analysis highlights three stocks—PayPal, Pinterest, and Micron Technology—trading at attractive PEG ratios below 1, suggesting they may be undervalued relative to their projected earnings growth. Notably, Micron’s low PEG comes despite a significant 40% long-term EPS growth forecast, driven by AI-related demand. In a market where AI hype has often decoupled prices from fundamentals, these metrics offer a grounded perspective for value-conscious investors.
- PayPal (PYPL) trades at a 0.69 PEG ratio with 15% annual EPS growth projected.
- Pinterest (PINS) holds a 0.70 PEG ratio with 20% long-term EPS growth expected.
- Micron Technology (MU) trades at 0.70 PEG despite 40% long-term EPS growth forecasts driven by AI memory demand.
The rise of artificial intelligence has distorted stock market valuations, pulling them far from underlying fundamentals. Traders have poured money into AI-related names, driving up prices on the assumption that growth rates will accelerate endlessly without setbacks.
This frenzy has left the broader market looking overextended, with the S&P 500 trading at elevated multiples despite uneven economic signals. Yet amid the hype, overlooked quality companies persist — those with solid growth trajectories trading at discounts that scream opportunity. These firms boast resilient business models and paths to compounding returns over the long haul.
PayPal (NASDAQ:PYPL), Pinterest (NASDAQ:PINS), and Micron Technology (NYSE:MU) are three stocks that fit the profile perfectly: overlooked gems ready to unlock incredible value over the coming decade.
As a cornerstone of online transactions, PayPal stands out for processing billions in payments annually through its vast ecosystem of merchants and consumers. Once a high-flyer in fintech, it has faced headwinds from slowing growth and competition, but recent quarters show signs of stabilization.
With a price-to-earnings-to-growth (PEG) ratio of just 0.69, PayPal trades at a steep discount to fair value — anything under 1 signals undervaluation when growth is factored in. This low multiple reflects temporary pessimism rather than structural flaws, especially when paired with analysts’ projections for long-term earnings per share (EPS) growth of 12% annually.
That double-digit growth forecast stems from PayPal’s ongoing investments in innovation, like its Fastlane one-click checkout tool and Braintree integration for developers. These moves aim to recapture market share lost to rivals such as Apple Pay and Stripe. In fiscal 2025, transaction volumes grew modestly, but margins improved as the company trimmed costs and focused on high-value users.
Over 10 years, as e-commerce penetration deepens globally — expected to hit 25% of retail sales by 2030 — PayPal’s network effects should amplify. Its moat lies in data-driven personalization, fraud detection, and cross-border capabilities, serving 400 million active accounts.
At this PEG, a 15% EPS compounder could deliver 5x returns if sentiment normalizes. Risks include regulatory scrutiny on fees, but PayPal’s cash flow — over $5 billion annually — provides a buffer for buybacks and dividends. For patient investors, it’s a bet on the inevitable shift to digital wallets.
Pinterest thrives as a visual search platform, blending inspiration with commerce for 500 million monthly users pinning ideas on fashion, home decor, and recipes. While social media giants dominate headlines, Pinterest’s niche in intent-driven discovery has flown under the radar, yielding a PEG ratio of 0.70 — well below social media averages. This bargain aligns with projected 20% long-term EPS growth, fueled by monetization ramps and international expansion.
The platform’s algorithm excels at converting passive browsing into purchases, with shoppable pins driving 40% of revenue from ads. In the third quarter, monthly active users hit a record, and average revenue per user climbed 5% globally, boosted by partnerships with Amazon (NASDAQ:AMZN) and Google Shopping.
Pinterest’s AI enhancements, like visual recommendations and AR try-ons, are early innings, potentially lifting ad efficiency by 30% over five years. Globally, only 20% of users are monetized, leaving room in markets like India and Brazil. A decade out, as short-form video fatigue sets in, Pinterest’s evergreen, positive-feed model could pull users from TikTok, sustaining 20% earnings growth.
At 0.70 PEG, it trades as if growth stalls, ignoring $2.6 billion in cash for acquisitions or R&D. Competition from Instagram is real, but Pinterest’s female-skewed, high-intent audience fosters loyalty. For buy-and-hold types, it’s a stealth play on the creator economy’s next phase.
Micron Technology is a leader in memory chips, powering everything from smartphones to data centers with its DRAM and NAND products. The AI surge has supercharged demand for high-bandwidth memory (HBM), where Micron holds a growing slice, but the stock remains grounded by cyclical industry fears.
Trading at a PEG ratio of 0.70, it’s cheaper than most tech hardware plays, offering a rare entry point into the semiconductor upcycle. Analysts peg long-term EPS growth at 40%, driven by AI infrastructure buildouts that could double data center spending by 2030.
Micron’s edge comes from its end-to-end manufacturing, allowing quick pivots to high-margin products like HBM3E chips for Nvidia’s (NASDAQ:NVDA) GPUs. Fiscal 2025 earnings beat expectations, with revenue up 49% year-over-year, thanks to recovering PC and server markets. Looking ahead, the company’s $8 billion capex spending targets 50% HBM capacity growth by 2026, positioning it to capture AI’s voracious data needs.