I’ve been screening for beaten-down large caps and two names that keep popping up are PayPal (PYPL) and Nike (NKE).
Both stocks appear to be trading around levels not seen since roughly 2016–2017 (or even earlier in Nike’s case), despite being much larger businesses today. PayPal has fallen back to prices last seen around 2017, while Nike recently hit levels not seen in over a decade.
Bull case:
-
PayPal is still generating significant cash flow, remains profitable, and trades at a much lower multiple than it did historically. 
-
Nike is still one of the strongest consumer brands in the world and could benefit if management successfully executes its turnaround. 
-
In both cases, the market seems extremely pessimistic.
Bear case:
-
PayPal may be a classic value trap facing long-term competitive pressures and slowing growth. 
-
Nike’s turnaround could take years, with continued weakness in China, consumer spending, and increased competition from newer athletic brands. 
-
Just because a stock is down 70–90% from highs doesn’t automatically make it cheap.
For those who have looked into either company:
-
Which do you think offers the better risk/reward today: PYPL or NKE?
-
Are either of these actually undervalued, or are they simply businesses in long-term decline?
-
What assumptions are you using for earnings/cash flow 5 years out?
-
If you own either stock, what’s your thesis?
Interested in hearing both bull and bear cases. I feel like these are exactly the kinds of names value investors should be debating right now.