Seeking Alpha
Profile| Send Message|
( followers)  

I recently wrote an article discussing Jim Cramer's recommendation of eBay (EBAY) stock in his Mad Money Lightening round program, but wanted to further discuss my analysis.

eBay is one of the leaders in online commerce, in respect to both eBay's online marketplace, and the payment processing system. eBay also made an acquisition of GSI Commerce, which helps brick and mortar businesses run their online storefronts. The company has been pursuing growth in many different areas, including new ways to pay in retail stores using PayPal, and more.


eBay is making significant strides in acquisitions, innovation, and smart investments. Recently eBay has poured $50 million in, which is India's newest online marketplace. With India's significant economic and population growth, this could be a great investment for eBay. As part of the deal, eBay will also get access to its registered users, as well as software and distribution networks used by SnapDeal.

Another major potential winner for eBay is its PayPal system's mobile growth. Mobile payments should see significant increase in usage, as more users are shopping on their phones and tablets. This also opens up opportunities for in-store purchases using your mobile phone as a "virtual wallet," and makes currency exchanges while traveling much easier.

Growth on existing business models is also doing well. PayPal is expected to grow at 22% annually, GSI Commerce is expecting growth of 14%, and eBay's marketplace is expecting growth of 14%.

As stated in my previous article, eBay does trade at a fairly large multiple of around 25, but is trading at about 1.4 times its growth rate.


In conclusion, I think eBay is a fantastic company, which is run extremely well and has a history of performing well for its shareholders. At current levels, eBay is fairly valued. The stock is up about 12% since this time last year, but I think it has a lot more room to grow. The median 12-month price target is around $64, which is a return of 21%. Any purchases made at or under $50 should perform well over the next year.

Source: Why You Should Consider eBay