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2 Bargain Stocks You Can Buy Today and Hold Forever

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These stocks have been beaten down recently, but long-term investors dont need to worry.

There is no shortage of stocks that have been beaten down so far in 2022. While the S&P 500 is down by only about 7% in 2022, many of the most popular stocks in the market are down by 20%, 30%, 50%, or even more from their recent peaks.

However, this also means it could be a great time to look for opportunities. Here's one real estate leader and a fintech giant that both look like tremendous bargains for patient long-term investors right now.

Image source: Getty Images.

A massive player in a growing market

Digital Realty Trust (DLR -1.36%) is one of the largest real estate investment trusts, or REITs, in the market, specializing in data center properties. If you're not familiar, think of data centers as the physical 'homes' of the internet – when you access a cloud-based software program, upload photos to social media, or visit your favorite websites, all of that data needs to be stored somewhere that is reliable and accessible. And that's where data centers come in.

Digital Realty has a massive portfolio of data center properties located around the world. As the volume of data flowing around the world continues to grow rapidly, demand for data centers should keep growing. The multi-year build-out of 5G infrastructure, and the rapid adoption of data-heavy devices like autonomous vehicles, augmented reality devices, and more should create a continuously expanding need for data centers.

This has already been a big winner for investors. Digital Realty has increased its dividend for 16 consecutive years and currently yields about 3.6%, and thanks to its smart growth strategy, the company's funds from operations (the real estate version of earnings) have grown by 10% annualized since its 2004 IPO. Since that time, the combination of income and growth has resulted in a staggering 2,220% total return – nearly five times the S&P 500's total return during that period. With shares down by more than 20% from recent highs, now could be a great opportunity to add shares.

A trillion-dollar ecosystem that isn't going anywhere

PayPal (PYPL 0.00%) has taken quite a beating recently, with shares down by more than 60% from their 2021 highs. And to be fair, there are some good reasons for the decline. PayPal's 2021 user growth was a major disappointment, and the company's forward guidance and management comments indicate that some of the company's previously stated long-term user growth targets might be a bit unrealistic.

However, don't lose sight of the fact that PayPal is a massively profitable fintech leader. In 2021, PayPal's ecosystem saw $1.25 trillion in total payment volume, 33% higher than in 2020, and generated over $25 billion in revenue. And while user growth might not have been what the market was looking for, 426 million active accounts is an extremely impressive number.

PayPal generated a staggering $5.4 billion in free cash flow last year, and is expecting even more this year, giving the company excellent financial flexibility to make acquisitions, reinvest in the business, or return capital to shareholders. And while user growth might be a bit sluggish for the time being, PayPal is still in the relatively early stages of monetizing its user base, especially its Venmo users, so the company could keep its earnings growth strong for years to come.

Expect short-term headwinds

To be perfectly clear, I'm not attempting to call a bottom in these stocks, and if certain headwinds persist, they could certainly fall in the short term. For example, if the Federal Reserve ends up raising rates faster than expected, it could put pressure on these and other stocks.

However, both of these are rock-solid businesses with excellent profitability and some big competitive advantages over peers. I'm confident that investors who measure their performance in multi-year periods will be glad they took advantage of the recent declines in these long-term winners.

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