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

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{01de1f41f0433b1b992b12aafb3b1fe281a5c9ee7cd5232385403e933e277ce6}. 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:

https://www.intelligentspeculator.net/livetrades

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

Ticker	Name	Price	PE Ratio	PE Next Year	Return YTD	Sales Growth	Analyst rating	Book Value	Beta	Revenue/Share	Sales 5Y Avg Growth	EPS 5Y Avg Growth
GOOG	Google Inc	536.94	N/A	15.91	0.27	18.88	4.44	N/A	N/A	N/A	22.46	34.7
EBAY	eBay Inc	55.27	34.62	15.96	-3.19	11.56	3.79	16.26	0.91	14.31	16.18	33.14

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) data by YCharts

Long 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.

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).