New Trade: Long Apple ($AAPL) and Short eBay ($EBAY)

By: ispeculatornew
Date posted: 02.16.2016 (3:00 am) | Write a Comment  (0 Comments)

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Today I’m coming out of the gate with a new trade as I get back to just over half of the portfolio invested As is always the case you can see the existing live trades here:

http://www.intelligentspeculator.net/livetrades

Today’s trade is one between 2 ecommerce players. I thought long and hard about doing a AMZN-EBAY play but given where they are trading, the risk vs. reward seemed better with Apple. That being said, expect me to soon get involved into AMZN.. more on that very soon!

ebay_amazon

Let’s start off by looking at the numbers:

TickerNamePricePE RatioPE Next YearReturn YTDSales GrowthBook ValueBetaRevenue/ShareSales 5Y Avg GrowthEPS 5Y Avg Growth
AAPLApple Inc93.999.999.34-10.527.8623.131.1240.6225.5634.76
EBAYeBay Inc22.4910.7810.74-19.65-2.255.550.957.113.6536.71

For some reason, the y/y quarterly sales growth chart came out funky on this one (I expected it to look strange for EBAY given the big spinout but it looked strange even for Apple so let’s just get started:

 

Long Apple (AAPL)

Apple continues to be undervalued by the market in my opinion. There are some concerns but there are so many other good stories and I do think the growing huge number of loyal iOS numbers will continue to generate growth in both hardware and services. The y/y comparison is very tough this year given sale date changes in China but also last year’s late arrival of the larger screen phones but I have no doubt that the iOS user base continues to expand overall. Apple continues to be one if not the cheapest name on my tracking board (in terms of forward P/E) which screams buy to me.

 

AAPL_chart

Next earnings: April 25th 2016

Short eBay (EBAY)

I have to say, I have been increasingly negative about eBay’s future. Its bright star Paypal has been spun off and it now has to compete head’s on with Amazon which no one has been able to successfully do. I don’t expect EBAY to succeed and therefore expect a continued slide in all its numbers. It does not have a single (from my perspective) edge vs. Amazon which leaves it in a very dark spot. It does not offer more selection, a better customer (or seller) experience, etc.  I will be curious to see how management approaches this problem but it does look like a great short at these levels compared to some other names.

EBAY_chart

 

Next earnings: April 20th

Disclaimer: This trade on AAPL-EBAY will be done on today’s opening, I do have an existing Apple position 
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