The 3 Stocks Worth Watching: A Value Investor's Perspective

Everyone’s on the hunt for the next best stocks to buy, but let’s be honest—anyone claiming to have the definitive answer is being disingenuous. The real goal isn’t to blindly chase stock picks; it’s to develop a solid, principle-driven investing process. That’s what we focus on—understanding how to analyze companies and make informed decisions. If you’re here for a quick stock tip without context, this isn’t for you. But if you want to learn how to fish rather than just be handed a fish, keep reading.

Stock #1: PayPal (PYPL)

I own PayPal, and while it has been a roller coaster, it remains a strong business. Some have written it off as a “dead company,” but its revenue and free cash flow continue to grow, and it’s actively buying back shares—moves I’d welcome from any so-called “dead” company.

Key Metrics:

• Market Cap: $80 billion
• Price-to-Earnings Ratio (P/E): 19
• Price-to-Free-Cash-Flow: 12
• Competitor Comparison: Nvidia’s price-to-free-cash-flow is 59, meaning for every dollar Nvidia generates, investors pay $59, while PayPal’s is only $12. Nvidia has growth potential, but is it worth paying 5-6x more? That’s the real question.

The Eight Pillars Analysis:

• All eight pillars check out, showing revenue, net income, and free cash flow growth.
• Free cash flow remains significantly higher than net income, a positive indicator.
• PayPal is aggressively buying back shares at a discount, a strategy that has historically led to massive stock gains (e.g., NVR and AutoZone).
• Return on Capital isn’t great, but it’s acceptable given the stock’s price.

PayPal’s Evolution & Future:

From pioneering online payments to becoming a financial Swiss army knife, PayPal has revolutionized transactions across 435 million accounts in 200 countries. Despite claims of decline, analysts project revenue growth of 5.1%, 6.7%, 12%, and 10.6% over the next few years.

Stock Analyzer Tool Results:

• Revenue Growth Projections: 3%, 5%, 7%
• Profit Margin: 12.5%, 14.5%, 16.5%
• Price Target Ranges:
  • Low: $60 - $75
  • Mid: $87 - $120
  • High: $130 - $180
• Current Price: $78
• Based on mid-range assumptions, this equates to a 15.3% return, and even at the lowest assumptions, it’s still 8.2%.

Stock #2: Uber (UBER)

Uber has been gaining attention, especially after billionaire investor Bill Ackman started buying in. The company has shown significant growth, recording its first-ever annual operating profit and a 20% YoY revenue increase in Q3.

Key Metrics:

• Market Cap: $170 billion
• 5-Year Growth Rate: 28% per year
• 3-Year Growth Rate: 41% per year
• Gross Profit Margin: 40%
• Price-to-Free-Cash-Flow: 28

Financial Success & Growth:

Uber has expanded beyond ride-hailing into food delivery, flight bookings, and grocery delivery, positioning itself as a comprehensive super-app.

Stock Analyzer Tool Results:

• Revenue Growth Projections: 6%, 10%, 14%
• Profit Margin: 10%, 15%, 20%
• Price Target Ranges:
  • Low: $42
  • Mid: $99
  • High: $202
• Current Price: $87
• Based on mid-range assumptions, Uber would need to drop for me to buy in, but its future growth remains promising.

Stock #3: Altria (MO)

Altria, a tobacco giant, offers an intriguing value play, especially for dividend lovers.

Key Metrics:

• Market Cap: $91 billion
• Dividend Yield: 7.75% (but consumes 80% of free cash flow)
• Return on Capital: 48% - 55%
• Price-to-Free-Cash-Flow: 11
• P/E Ratio: 9

Eight Pillars Analysis:

• All eight checkmarks are met, showing revenue, profit, and free cash flow growth.
• The stock is incredibly cheap, but the long-term concern is declining cigarette consumption.
• Altria is diversifying: Investing in IQOS, oral nicotine pouches, cannabis (via a $1.8 billion stake in Cronos Group), and owning a portion of Anheuser-Busch.
• It remains a dividend powerhouse with over 50 years of consecutive dividend hikes.

Stock Analyzer Tool Results:

• Revenue Growth Projections: -2%, 0%, 2%
• Profit Margin: 27%, 30%, 32%
• Price Target Ranges:
  • Low: $30
  • Mid: $40
  • High: $51 - $57
• Current Price: $53
• For me, I’d wait for it to get closer to $30 before buying.

Final Thoughts: It’s All About Process

If you came here looking for three stocks to buy blindly, that’s not what we do. Investing isn’t about hot picks—it’s about understanding the why behind your decisions. If you know why you’re buying, you’ll know when to sell, and you won’t panic when the market drops.

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