Four Stocks with Promising Year-to-Date Gains: Are They Still a Good Buy?

With the stock market often fluctuating unpredictably, it’s always thrilling to spot companies that outperform, especially those crushing the S&P 500’s year-to-date return of 23.61%. Today, we’ll explore four stocks that have gained an average of 43% year-to-date and analyze whether they still have potential to deliver long-term returns.

1. PayPal (PYPL)

PayPal has seen its ups and downs, but the question remains: is it still a worthy investment? Let’s dive in to see if it’s undervalued or overhyped.

• Performance Overview: PayPal has rebounded impressively from a low of $50, reaching a 50.64% gain over the past year and up 31% year-to-date. Yet, some still see it as a company in decline. Active account creation has slowed, but it’s offset by significant growth in other areas.

• Metrics: These numbers challenge the “dying” narrative; while account numbers have plateaued, monthly active accounts are up 3%, with a healthy 8% growth in the number of payment transactions. Venmo, a PayPal subsidiary, remains popular, adding value for customers and the company alike.

• • Total Payment Volume: Up 11% to $416 billion.
  • Revenue: Increased 8% to $7.9 billion.
  • EPS: Non-GAAP EPS rose 36%, reaching $1.19.

• Valuation and Growth Potential:

• • Current PE Ratio: 19.
  • Price to Free Cash Flow: 12.6, suggesting a potential bargain.
  • Analysts project steady EPS growth, with an estimated range of $4.50 to $6.91, and revenue growth forecasted in the high single digits.

• Stock Analyzer Results:

• • 10-Year Analysis: Assuming low, middle, and high growth scenarios with a range of revenue growth (4% to 10%), profit margins (12.5% to 16%), and price-to-earnings (14 to 20), our intrinsic valuation places PayPal at:
    
  • • Low: $75
    • Middle: $130
    • High: $222
      

With a middle range forecast providing a potential 16% return, PayPal could be a strong consideration for investors seeking steady returns.

2. Fortinet (FTNT)

Fortinet is another stock with robust growth, showing a massive 444% return over the last five years, including 48% in the past year and 43% year-to-date.

• Performance Metrics:

• • Fortinet has achieved an impressive 23% compounded revenue growth over the last 10 years, without relying heavily on acquisitions.
  • Its return on invested capital is phenomenal, reflecting strong organic growth.

• Valuation and Outlook:

• • Analysts project EPS growth from $2 to $3.55 over the next four years, indicating approximately 70% growth.
  • Fortinet boasts an 80% return on equity, suggesting significant profitability on invested capital.

• Stock Analyzer Results:

• • 10-Year Analysis: Using conservative estimates, we considered revenue growth of 6% to 14%, with a free cash flow margin of 27% to 37%. The estimated valuation yielded:
  • • Low: $37
    • Middle: $67
    • High: $120

Fortinet’s current price of $83 suggests it’s trading above its intrinsic value, so waiting for a price drop might make this a more attractive investment.

3. 3M (MMM)

3M is a diversified player with a long history, though its growth trajectory is more conservative.

• Performance Overview: While 3M’s stock has remained relatively flat, the last year saw an 88% uptick, and the company has maintained stability despite legal challenges.

• Dividends and Cash Flow:

• • Dividends: Last year, 3M distributed $2.9 billion in dividends, leveraging its substantial free cash flow.
  • Free Cash Flow: While revenue growth remains modest, free cash flow, which averages 20% of revenue, is a key driver of value.

• Stock Analyzer Results:

• • 10-Year Analysis: Factoring in slow revenue growth (1% to 5%) and conservative PE ratios (13 to 17), we estimate 3M’s intrinsic value as:

• • • Low: $81
    • Middle: $118
    • High: $170
      

3M offers value through dividends, even with slower revenue growth, making it appealing for investors seeking stable income.

4. DoorDash (DASH)

DoorDash has grown exponentially since its debut in 2020. Its 53% year-to-date gain and 48% growth since inception indicate a potentially explosive long-term trajectory.

• Revenue Growth:

• • Revenue soared from $290 million in 2017 to $9.6 billion in the last 12 months.
  • While active order growth rates have tapered, DoorDash’s service offerings are still seeing significant adoption rates.

• Profitability Challenges:

• • DoorDash’s profit margins are still evolving, and the company has been diluting shares, which some investors might find concerning.

• Stock Analyzer Results:

• • 10-Year Analysis: We examined revenue growth (8% to 24%) and profit margins (15% to 25%), with the following valuation:

• • • Low: $71
    • Middle: $206
    • High: $550

DoorDash’s premium pricing reflects its growth potential but might not yet justify its current price of $53. However, its appeal lies in its significant upside, should it successfully sustain growth.