New Trade: Long eBay ($EBAY) & Short IAC Interactive ($IACI)

By: ispeculatornew
Date posted: 05.07.2012 (5:00 am) | Write a Comment  (0 Comments)

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This weekend was another struggle. For some reason, I do not see many great trading opportunities these days and I came very close to not selecting a new trade today. Why? I’ve set myself a maximum of 7 trades open at once but it’s very possible that on some occasions I will be unable to see good opportunities (at that point, I will be posting a in depth post about my trading which I’ve hinted in the Tech Stocks Newsletter).  Fortunately, after looking through the numbers a bit deeper, I did find a good trading opportunity. I’d invite you to take a look at the numbers for both of these stocks:

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Long eBay (EBAY)

I wrote a detailed post recently about $EBAY and why I do believe there is a lot of medium to long term upside for eBay, I simply believe that Paypal will be able to keep up its strong momentum and growth going forward. I do think that online advertising growth will continue to be a bit difficult in these tough economic times which will certainly make life easier for a company like eBay compared to IACI.  The basic idea behind this trade is the fact that both of these companies have been trading at comparable P/E ratios and have achieved comparable revenues growth. Which of these two is most likely to keep up the growth going forward? I’d say eBay, without much of a doubt.

 

 

Short IAC Interactive (IACI)

There is no doubt, I’ve had a difficult time getting a good feel on IACI. The company has been a much stronger player than I had anticipated in my annual Tech Stock Power Rankings. The returns has not been overwhelming but remains stronger than I had expected. Part of the issue for me is that IACI continues to be focused on so many different activities that it’s difficult to get a great feel for it. I still consider IACI to be very dependent on the advertising market which has remained fairly weak.  In the end, I simply think that the match between these two is very solid and makes for a promising trade.

 

 

Disclosure: No positions on eBay ($EBAY) or IAC Interactive ($IACI), this trade will be opened on Monday morning

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