Both stocks were up Thursday. Square has risen 67% in 2020, and PayPal 57%.
"They're both expensive right now but I would definitely prefer PayPal over Square," Mark Tepper, president at Strategic Wealth Partners, said Wednesday on CNBC's "Trading Nation." "I'd be waiting to pounce if and when there's a pullback in PayPal."
Tepper says PayPal is a "pure play on e-commerce boom" while Square could get hurt by its exposure to smaller "mom-and-pop shops."
"Square does have an advantage with their cash app over PayPal's Venmo, but I more or less would see that as a positive catalyst for PayPal, as they upgrade that system. So we're still long-term bullish on PayPal, but I think it would have to drop below that $140 level for us to actually pull the trigger," said Tepper.
Newton Advisors founder Mark Newton sees PayPal coming under pressure after its rally.
"PayPal has gotten clearly very extended. The stock has more than doubled off its lows just in the last three months, and so you go from $80 to over $160. Structurally the stock just isn't really all that sound. Technically it's got an RSI, relative strength index [of momentum], reading of over 77 on a weekly basis. So my thinking is the stock does start to pull back in the weeks ahead and I'd be actually be a buyer right down near $125 to $130," said Newton.
PayPal would need to drop 23% to reach $130.
"Square, on the other hand, I actually view as the more attractive of the two because the stock is literally just breaking out into new high territory," Newton said. "I actually prefer Square if you can get this in the mid- to high-$90s. That's what I'm looking at."
Square was trading above $105 on Thursday.