This pronounced recession and market slump represent either the end of American capitalism as we know it, or the beginning of a new era for American capitalism, starting with the biggest fire-sale on stocks in decades. And with that in mind, eBay, Inc. (NASDAQ: EBAY) is worth a review. In general, analysts believe eBay has turned the corner: flattish FY 2009 first half revenue should be aided by a macroeconomic tailwind in the second half, good for a 2-4% full-year increase; FY 2010 revenue increases should approach double-digit levels.
Other positives: The PayPal online electronic payment system continues to gain market share, with a solid 12-15% FY 2009 revenue gain seen, and online phone system Skype also should approach a 20% revenue gain. The First Call FY 2009/FY 2010 EPS estimates for EBAY are $1.47 to $1.55.
True, conventional marketplace eBay transactions will struggle to reach FY 2008 levels in FY 2009, but eBay's superior brand and auction experience should hold down the fort, until the U.S. and global economies start to recover. A new management team is also boosting analysts' confidence in eBay's international growth potential.
Hence, eBay's shares are now about as cheap as an empty shoe box. And as the legendary founder and owner of the New York Giants, the late Tim Mara, once said, "Even an empty shoe box is worth $500."
Stock Analysis: eBay is a moderate-risk stock. Consider buying a 25% position in EBAY now; then buy another 25% in three months, if U.S. economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your EBAY position in the first half of 2009. Sell/Stop Loss if you were to buy shares in this company: $7.
- -
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
Closing Bell: When We All Love the PIIGS (NBG, SQNM, PG, ERTS, KO)
Serious Money: Cheapest Stocks List Shrinks from 26 to 21
Chasing Value: Hasbro Earnings Makes My Point
