New Stock Pick: Long Google (GOOG) and Short Ebay (EBAY)

By: ispeculatornew
Date posted: 08.19.2011 (6:00 am) | Write a Comment  (0 Comments)

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As I had discussed earlier this year, one of the chances that I’m doing to my trading method is no longer starting any new trades past August., you can read about the reasons here. Therefore, this could very well end up being my last new trade of the year. I will of course still be posting my opinion on many of the stocks that I follow as well as dividend stocks. Because of that fact, it is somewhat fitting that my last trade could be going long Google, which has been a stock I have relied on quite a bit in recent years. It’s not been a stock that I have been as successful trading as some others but still, it remains one of my favorite stocks/companies.

Before going further, let’s take a look at the numbers that we used this time around:

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Long Google (GOOG)

It’s no secret, I’m a big fan of Google and while I’m not sure how its latest move will impact the company, I do still think the company has a lot of growth left and if buying Motorola was an important step in securing Android’s future, then it was a brilliant and necessary move. Will the current economic uncertainty impact Google? Absolutely but I do think it does still have more medium and especially long term growth than the stock I am pairing it off against eBay (EBAY) despite the fact that they trade at virtually the same P/E ratio.

Short eBay (EBAY)

By almost any measure, I’m a big believer in eBay, especially in its banking business otherwise known as Paypal which seems destined for greatness and many more years of strong growth. That being said, because of the size of its other businesses, eBay has been unable to deliver as much growth as I would have expected and hoped for.

The Basic Idea Of This Trade

In terms of trading, this is a very simple trade. I’m simply trading two two stocks that are trading at very similar valuations but I believe a lot more in the growth of Google (GOOG) despite the fact that it is spread out and has so many competitors.

Disclosure: No positions on Google (GOOG) or eBay (EBAY)

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