johngonole

Three Stocks with a Margin of Safety

Well I may have negative 6 on my comment above but hey I made 20% or so on my positions. I'd rather have the money in this case than gain your favor.

eBay Offers Something Amazon Cannot

Long term I like Ebay and have invested in its shares. AMZN is too rich as always. When their growth rate drops the shares will stagnate. EBAY has a better moat because it is essentially made up of millions of small nimble independant sellers. EBAY makes money from the recycling of materials which is also good for the economy. I can find things on EBAY that I can't find anywhere else. About 70% of the time I can find the item cheaper on EBAY then AMZN. EBAY does need to allow sellers to rate the buyers like they used to. While fraud used to be on the seller side now I suspect the buyers will be taking advantage now. The power seller system though is solving much of the buyers remorse issues. EBAY recent monopolization of South Korea has to be a good thing for them. There can be only one sucessfull online auction company. Craigslist is probably there biggest threat. However lets face it finding things on Craigslist is much more difficult. EBAY should buy it if the price is low enough

Probably EBAYs biggest problem has been there mis use of cash on their balance sheet. Still they've got a big lead and will be around for a very long time as long as management doesn't wreck the company which would be hard to do.

Three Stocks with a Margin of Safety

The author and I must think a like. Over the last month I have established positions in EBAY, DELL, and MSFT. I think the pessimism over EBAY is overblown. EBAY is now on par with AMZN for me. While I used to purchase most of my items on AMZN I am now finding that EBAY usually has the lower priced. I've recently purchased a surround sound system on EBAY and my TV at AMZN. I think EBAY has a tremendous moat. They already make twice as much as AMZN and they don't even have to hold inventory. After I analyzed EBAY I just couldn't believe how great their metrics were. The business is easily scalable and highly profitable. It is a true market place. Little guys all over the world are finding their nitch and beating up the large companies with higher overhead. While lower oil prices should help EBAY be more competitive versus the bricks and mortar they are in a down trend due to the overall economy. Since EBAY makes a percentage they are also a good hedge for inflation. When all those newly printed dollars actually begin to circulate (that is when the velocity of money reverts to the mean) inflation will push prices upward and EBAY will likewise benefit.

EBAY will suffer as will all retailers while unemployment is rising. When looking at EBAY, DELL, and even MSFT one must think long term. Now if only Obama will cut the facisim crap everyone could relax and get back to doing the real work of the country.

Those who don't get it are scared because Obama has been telling them to be scared. Those who do get it are scared because of what Obama is promising those who don't get it. Thus everyone is scared except those who don't listen or care. Get it!

Amazon, eBay, Overall eCommerce Suffering from Retail Woes

I have to weight in just to say I bought Ebay not to long ago. I'm under water a bit but its only half position. One that I might be willing to triple. I think the pessimism on EBAY is overdone. When it comes to auctions they have a wide moat indeed. They also have a wide moat when it comes to the sales of aftermarket items....think of a giant flee market.

That said the balance sheet is very strong. They are estimated to basically maintain their current earings and PE is less than 10. Long term they can grow overseas and even here in North and South America. I do think the economic contraction will effect them like anyone else due to falling prices and volume. However long term they are a market place not a vendor. I don't think they have any competitors that are about to grab market share from them.

The biggest problem EBAY is having and seems to have had for a while is figuring out what to do with their free cash flow. Eventually they will get it right.

Basically I think we are probably looking at a slow to medium growth company selling as a value stock. It also has a wide moat. Can't get much better than this. Just wish I could find 7 or 8 more companies like this to invest in.