New Trade: Long Google ($GOOG) & Short eBay ($EBAY)

By: ispeculatornew
Date posted: 02.11.2015 (3:30 am) | Write a Comment  (0 Comments)

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Yesterday was a very good day (I’m closing my first trade) and the average trade return so far this year as shot up north of 7%. Of course, it’s still very early and things could (and will) change significantly but it’s obviously better to have a good start than a bad one (duh!).

As is always the case you can see my long & short trades (from 2015 but also past years) here:

http://www.intelligentspeculator.net/livetrades

Let’s start off by looking at the numbers for today’s trade, two high priced stocks:

TickerNamePricePE RatioPE Next YearReturn YTDSales GrowthAnalyst ratingBook ValueBetaRevenue/ShareSales 5Y Avg GrowthEPS 5Y Avg Growth
GOOGGoogle Inc536.94N/A15.910.2718.884.44N/AN/AN/A22.4634.7
EBAYeBay Inc55.2734.6215.96-3.1911.563.7916.260.9114.3116.1833.14

The chart that I always tend to look at is once again to be used today and I do expect the clear trend here to continue with eBay’s revenues and earnings growth slowly moving down. Google is trickier to predict but I feel confident that it will be superior to EBAY’s.

GOOG Revenue (Quarterly YoY Growth) Chart

GOOG Revenue (Quarterly YoY Growth) data by YCharts

$googLong Google Inc. (GOOG)

To say that I have blind confidence in Google would be a lie. Even after all these years, I do still struggle to get a clear picture of Google and what it is actually trying to do. In one way, Google is a simple company that generates advertising revenues from its search engine dominant position. But then you have all of these other products, the incredible Android position, Google X, etc. I do still think though that in the end, Google is able to generate significantly higher long term growth than a company like eBay which is priced at an identical forward P/E ratio.

ycharts_chart

Next earnings release: April 16th 2015

Short eBay Inc (EBAY)

eBay has been a fairly easy company to track in the past few years which I’ve been treating mostly as an online bank because that is where most of the growth & value is.  The fact that eBay has finally confirmed it would be spinning out Paypal in a few months is a positive but as I’ve mentioned in the past I think in a way it’s a little too late for Paypal to become what it once had an opportunity to become (the default “electronic” payment system).

ycharts_chart (1)

$ebay

Next earnings release: April 22nd 2015

Disclaimer: No positions on eBay (EBAY) or Google (GOOG) but I will open this trade on the open

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