2 Beaten-Down Stocks That Could Make a Comeback in 2026
Key Points
Following a revenue dip, The Trade Desk should see better performance.
With its stock in the dumps, PayPal has been buying back shares hand over fist.
The new year should bring better investment results for both stocks.
- 10 stocks we like better than The Trade Desk ›
Finding 2025's most unloved stocks and investing in them with the expectation for a rebound in 2026 can be a smart investing strategy. However, you must make sure there's a rock-solid investing thesis behind them, and hope isn't a good one.
I think The Trade Desk (NASDAQ: TTD) and PayPal Holdings (NASDAQ: PYPL) are two stocks that are primed for a comeback after a terrible 2025. Each of the companies has real reasons for being able to return to favor in the market during 2026, and I believe each will crush the market.
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1. The Trade Desk
The Trade Desk used to be the premier investment in the advertising space. However, it has fallen from grace. It's down around 70% in 2025, making it the worst-performing stock in the S&P 500.
That's a terrible designation to have, but it could mean a bounce back in 2025. Although it's not central to the S&P 500, there's an investing strategy known as "The Dogs of the Dow," which involves buying each of the previous year's lowest-performing Dow Jones Industrial Average components, and potentially outperforming the market the next year.
However, next year's performance is specific to each company, and buying a failing company is a bad investment overall. Fortunately, The Trade Desk is far from a failing company.
The Trade Desk operates on the buy side of the ad market, which matches companies wanting to advertise their products to the best location on the internet. This could be in a podcast, a connected TV commercial, or in the margins of a web page.
However, The Trade Desk isn't the only one operating in this space. Meta Platforms and Alphabet run this operation on their properties, and Amazon is growing as a popular option as well. Those are three behemoths looking to crush The Trade Desk, but they haven't succeeded yet.
In Q3, The Trade Desk's revenue rose 18% year over year. The market was unhappy with this result as it continued its streak of declining revenue growth.
TTD Revenue (Quarterly YoY Growth) data by YCharts
However, investors are forgetting one major thing: political ads. In last year's Q3, there was huge spending for political ads that wasn't there in 2025. This caused a revenue dip, but that should provide better growth next year. With a better outlook for next year, investors can take advantage of The Trade Desk's cheap stock price.
TTD PE Ratio (Forward 1y) data by YCharts
At less than 18 times next year's earnings, The Trade Desk looks like a solid buy right now. It's rare to find a value stock in the market growing at a growth stock pace, but The Trade Desk is a shining example of one.
2. PayPal
This has been a bad year for PayPal, with the stock dropping about 30% through late December. This continues another long losing streak, as PayPal has failed to gain much traction in recent years among investors. PayPal's growth has been rather slow, with most quarters delivering high single-digit growth.
PYPL Revenue (Quarterly YoY Growth) data by YCharts
With exciting artificial intelligence stocks that are doubling or tripling their revenue each quarter, boring stocks like PayPal got left out. This has made PayPal's stock unbelievably cheap at 10 times next year's earnings.
PYPL PE Ratio (Forward 1y) data by YCharts
Management is doing the smart thing and plowing nearly all of its free cash flow into share repurchases to boost its diluted earnings per share (EPS) growth rate. This has worked very well, and its diluted EPS growth rate has been impressive in the latter half of the year.
PYPL EPS Diluted (Quarterly YoY Growth) data by YCharts
If PayPal can continue buying back shares at a bargain price and delivering huge EPS growth, I think the stock can make a huge comeback even if growth is moderate. This sets PayPal up to return to a reasonable valuation level, which will cause a massive gain in the stock in 2026.
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Keithen Drury has positions in Alphabet, Amazon, Meta Platforms, PayPal, and The Trade Desk. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, PayPal, and The Trade Desk. The Motley Fool recommends the following options: long January 2027 $42.50 calls on PayPal and short December 2025 $75 calls on PayPal. The Motley Fool has a disclosure policy.
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