eBay Inc (EBAY), Amazon.com, Inc. (AMZN): Who Wins When Online Retailers Have to Collect Taxes?

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This principle isn’t a bad one, but eBay dodges any question about how many sellers this would actually affect. It seems like eBay Inc (NASDAQ:EBAY) is making much ado over nothing—the majority of its sellers would not be affected by the law. Since most sellers wouldn’t have to collect the tax, eBay Inc (NASDAQ:EBAY) would remain a thrift-shopper’s go-to online store. A few prolific sellers would have to collect the tax, but for the most part eBay Inc (NASDAQ:EBAY) would be unharmed by the tax.

eBay Inc (NASDAQ:EBAY)’s campaign against it seems to be a matter of principle, and should not affect its outlook. However, there are many other factors affecting a stock’s growth, so a decision to buy or sell should not be made on this news alone.

Brick-and-mortar retail stores come away on top

Target and Wal-Mart Stores, Inc. (NYSE:WMT) would both benefit directly from the enforcement of a sales tax. There are thousands of both stores all across the U.S., and if the price gap is closed by the Marketplace Fairness Act, it’s easy to see many consumers choosing the immediate gratification of a physical purchase over savings of just a few dollars.

Wal-Mart currently has a P/E ratio of 15.4, while Target Corporation (NYSE:TGT)’s is just below at 15.4. Investors would do well to consider the effect of the proposed law on earnings—both companies are expected to grow on pace with the industry, but if the law is enacted then we can expect the department store industry as a whole to grow more rapidly.

If and when the Marketplace Fairness Act takes effect, you’ll want your money in department stores and other physical retailers who could capitalize on an exodus from online shopping (especially from small online retailers). The exodus could be large or small, but regardless it will help Target Corporation (NYSE:TGT) and Wal-Mart Stores, Inc. (NYSE:WMT), and you’ll want to catch it on the way up.

The article Who Wins When Online Retailers Have to Collect Taxes? originally appeared on Fool.com and is written by Hunter Hillman.

Hunter Hillman has no position in any stocks mentioned. The Motley Fool recommends Amazon.com and eBay. The Motley Fool owns shares of Amazon.com and eBay. Hunter is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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