EBAY INC. $43 - Nasdaq symbol EBAY

EBAY INC. $43 (Nasdaq symbol EBAY; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 1.3 billion; Market cap: $55.9 billion; Price-to-sales ratio: 4.3; No dividends paid; TSINetwork Rating: Above Average; www.ebay.com) gets half of its revenue from its auction websites, which now have 104.8 million users.

The company gets a further 40% from processing online payments through its PayPal service. This business has huge potential, particularly as it expands to retail stores and handling payments from smartphones.

The remaining 10% comes from GSI Commerce Inc., which helps businesses process orders from their websites. eBay paid $2.4 billion for GSI in June 2011.

In the three months ended June 30, 2012, eBay’s revenue rose 23.1%, to $3.4 billion from $2.8 billion a year earlier. Revenue rose 26.5% at PayPal and 9.1% at the auction sites. GSI contributed $221 million to the quarter’s revenue.

Earnings rose 15.7%, to $730 million from $631 million. Per-share earnings rose 16.7%, to $0.56 from $0.48, on fewer shares outstanding.

The stock has gained 39% since we first recommended it at $31 in our December 2010 issue. It now trades at 20.8 times eBay’s projected 2012 earnings of $2.07 a share. That’s still a reasonable p/e ratio in light of its rising earnings and PayPal’s growth.

eBay is a buy.

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Blue Chip Stocks

Blue chip stocks are big, well-established, dividend-paying corporations with strong business prospects. These are companies that also have sound management that should be able to make the right moves to keep competing successfully in a changing marketplace.

Dividend Stocks

Dividend stocks make cash payouts that serve as a way for companies to share the wealth they’ve accumulated. These payouts are drawn from earnings and cash flow and paid to the shareholders of the company. Typically, these dividends are paid quarterly, although they may be paid annually or even monthly as well.

Value Stocks

What are value stocks?

One of the sweetest and most profitable pleasures of successful investing is to buy high-quality “value stocks” (or stocks that are reasonably priced, if not cheap, in relation to its sales, earnings or assets), then hold on to them as mainstream investors recognize the value and push up the share price.

Growth Stocks

Growth stocks are companies that are likely to have sales and earnings growth well above market average. Frequently they pay few, if any, dividends. Instead they typically reinvest any extra cash flow to promote further growth. Chosen wisely—according to Pat McKeough’s advice—high-quality growth-oriented stocks can be worthwhile additions to most well-diversified portfolios.

ETFs

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ETF is an acronym for exchange traded fund.. These exchange traded funds are used to track indexes as closely as possible, since investors cannot actually buy an index outright.

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AI Investing

Artificial intelligence (AI) is essentially the merging of today’s big computing with big data. This has resulted in breakthroughs in everything from creating machines to recognize faces with more accuracy than a human, to the development of chatbots able to collect, organize and simplify all the Internet has to say on any topic.

Spinoffs

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A penny stock in general trades for under five dollars a share, and as the name implies, sometimes for pennies. Most of the time they’re young companies, or start-ups in speculative markets like mining or technology.

Mining Stocks

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Businesses that work in the extraction, refining and delivery of energy sources such as natural gas, oil, uranium and coal, are considered energy stocks.