Why I Bought PayPal

I bought PayPal (PYPL) yesterday. Wanted to buy this great company for a long time, but didn’t like the price. Now it looks like the price is OK.

Doesn’t mean it can’t go lower, nothing is certain. But fast growing company, part of internet financial revolution, trading at less that 20 future P/E and PEG 1.20 is cheap in my view.

There are several new growth areas for a company.

First of all, now many companies offer PayPal as an option when paying for online purchases. Second is xoom.com. If you transfer money between countries, you know how outrageously expensive it is for small amounts. Xoom lets you transfer money much cheaper at better currency conversion rates that alternatives.

There are companies on the receiving side as well. I don’t know how long Moneygram (MGI) and Western Union (WU) can survive. MGI, in my opinion, is walking dead. WU has bigger reach and a lot of loyal customers. I think those loyal customers are growing old and dying, and company will be dying with them.