eBay (EBAY) has been one of my best performing large cap names so far in 2012. I bought and profiled these shares back in early January when the stock was trading close to $30, mainly due to its fast growing PayPal franchise. EBAY is up more than 40% since then after a stellar earnings report. I am holding my shares as the company is hitting on all cylinders and rapidly evolving into a payment powerhouse. With mobile payments just starting coming into their own, I believe Paypal will soon be seen as a major competitor to the likes of Visa (V) and American Express (AXP) and it will remain a core part of my long term portfolio,
Positives from the earnings report of eBay
- The company beat earnings estimates by a penny and reported $40mm more revenues than analysts' projected.
- PayPal saw revenue increase 26% Y/Y and active registered accounts rise 13% to 113.2M
- The company predicts both PayPal and Marketplaces will handle $10B in mobile transactions this year, above prior estimates of $7B and $8B.
"eBay Inc. provides online platforms, services, and tools to help individuals and merchants in online and mobile commerce and payments in the United States and internationally." (Business description from Yahoo Finance).
Five additional reasons EBAY is a good growth pick up for under $44 a share:
- As stated in the company's earnings call, mobile payments and shopping revenue are exploding. As the smartphone migration continues to grow exponentially; EBAY should continue to be a big winner.
- Analysts expect revenue growth of 20% in FY2012 and 15% in FY2013 (Look for these to be revised higher in coming weeks)
- Needham and Benchmark upgraded the stock to a "Buy" in the second quarter. Look for more upgrades given this earnings report.
- The company has a robust balance sheet with billions of net cash on the books and is reasonably price at 16 times forward earning.
- The stock appears to have consolidated in a range of $38 to $40 over the last three months and is ready to break out for its next up leg up (See Chart)