The Trade Desk is still growing at a faster pace than the market, despite last year’s underperformance.
Design software giant Adobe continues to hold its own against generative AI.
Digital payment processor PayPal is rapidly buying back its shares.
10 stocks we like better than The Trade Desk ›
While growth investing has been the best strategy for ultimate investment returns since the artificial intelligence (AI) arms race began in 2023, it has also claimed some victims. There are several companies that are actively being disrupted, although not all of them are AI victims. This opens up opportunities for value investing, as these shares have sold below a reasonable valuation.
If you want to add a little value to your portfolio, I think investors should consider it The Trade Bureau(NASDAQ:TTD), Adobe(NASDAQ: ADBE)And PayPal holding company (NASDAQ:PYPL).
Image source: Getty Images.
The Trade Desk is not a business disrupted by artificial intelligence; it disrupted itself by deploying it! It introduced its AI-powered ad buying platform, Kokai, to mixed reviews. This caused some customers to abandon the platform completely and others to scale back usage. The Trade Desk is actively working to resolve this blunder, but it has taken a toll on its stock.
Additional, Amazon has entered the advertising game and captured a large portion of the market that The Trade Desk hoped to acquire. Amazon’s consumer information is much more accurate than anyone else’s because it contains factual data about what consumers are looking for.
All of this has disrupted The Trade Desk’s investment thesis, and the stock has been one of the worst performers S&P500 parts last year. The stock is down more than 70% from its all-time high, but investors should consider picking up this old winner at a much more attractive price. The Trade Desk isn’t that expensive now, trading at 18.5 times forward earnings.
TTD PE ratio (forward) data per YCharts. PE ratio = price-earnings ratio.
For reference, the S&P 500 as a whole trades for 22.1 times forward earnings. You would think that a company trading at a discount to the market would grow more slowly, but that’s not the case. In the third quarter, The Trade Desk’s revenue increased 18% year over year. For 2026, Wall Street expects growth of 16%. That’s a recipe for a business that can bounce back, and it’s one of my top investments for 2026.
Adobe is a company that everyone is convinced will be disrupted by generative AI. As the various generative AI engines become more sophisticated in generating AI images, it is believed that there will be no need for Adobe’s creative design software. However, Adobe has openly embraced generative AI tools and worked to integrate them into its platform.
In their eyes, there will always be a need for professionally designed images, even if they are assisted by generative AI tools. Adobe products give the user ultimate control over the end product, which is essential when shaping a brand. Since the AI revolution kicked off in 2023, Adobe’s growth rates haven’t really changed.
ADBE revenue (quarterly annualized growth rate) according to YCharts. YoY = year over year.
This shows that things are going well and growing, even though everyone assumes it will be disrupted. The market also has no confidence in its stock, trading at a dirt-cheap 14.4 times forward earnings. Adobe is a worthwhile play to pick up, and it can deliver solid returns.
PayPal is the cheapest stock of the three, trading for just ten times forward earnings. It’s fighting other payment processors and payment ecosystems to maintain its market share, and it’s doing a fine job. Growth is not spectacular, but continues to deliver mid to high single digit growth every quarter.
However, PayPal does the smart thing and buys back as many shares as possible at this low share price. Because the shares are cheap, these share buybacks have an outsized effect, causing diluted earnings per share (EPS) to rise much faster.
PYPL revenue (quarterly annualized growth rate) according to YCharts. YoY = year over year. EPS = earnings per share.
If PayPal keeps this up, it will eventually become too cheap to ignore. That’s why I think PayPal is a great stock to buy now and wait for the market to value it fairly.
Before purchasing shares in The Trade Desk, consider the following:
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Keithen Drury holds positions at Adobe, Amazon, PayPal and The Trade Desk. The Motley Fool holds positions in and recommends Adobe, Amazon, PayPal, and The Trade Desk. The Motley Fool recommends the following options: long January 2027 $42.50 calls on PayPal, long January 2028 $330 calls on Adobe, short January 2028 $340 calls on Adobe, and short March 2026 $65 calls on PayPal. The Motley Fool has a disclosure policy.
3 Absurdly Cheap Stocks That Could Double by 2026 Originally published by The Motley Fool
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