Options for eBay Inc (EBAY) in the Americas

Page 1 of 2

As internet penetration and online shopping increase worldwide, e-commerce companies are faced with massive growth opportunities. Although many can benefit from this trend, some market leaders like eBay Inc (NASDAQ:EBAY) seem poised to outperform their peers. However, if you don’t want to go mainstream, other companies offer similar business models and plenty of room for growth. Overstock.com, Inc. (NASDAQ:OSTK) and Mercadolibre Inc (NASDAQ:MELI) are two of these firms, which hold compelling growth prospects in the U.S. and Latin American markets, respectively. Let’s take a closer look at them in order to elucidate if they stand as good investments or not.

eBay Inc (NASDAQ:EBAY)

Bet on Goliath

eBay Inc (NASDAQ:EBAY) is one of the few companies that doesn’t need an introduction. With a market capitalization of approximately $70 billion, it dominates the e-commerce space comfortably and has become one of the largest retailers in the world. Trading at 25 times its earnings, at half the industry average, while expected to outperform its peers in terms of EPS growth over the next few years, this is a stock to buy and hold on to.

With a wide international presence (in over 40 countries) and 52% of 2012’s revenue coming from overseas markets, emerging economies provide plenty of growth opportunities. As the penetration of the internet grows rapidly in these countries, accompanying the flourishing middle-classes, e-commerce is only bound to succeed.

PayPal (its payment system) and the mobile segment are two other growth catalysts to be taken into account when investing in eBay Inc (NASDAQ:EBAY). PayPal is becoming increasingly popular in both the online and offline segments and a partnership with Discover Financial Services (NYSE:DFS) should further boost its acceptance. The mobile and tablet segment, on the other hand, promises to deliver plenty of upside, mainly on the back of the firm’s user-friendly apps for these platforms.

Finally, diversification will also play an important role in eBay Inc (NASDAQ:EBAY)’s business growth. Adjacent platforms like StubHub and Brands4Friends along with investments in MercadoLibre, Tradeshift, FreshBooks, BillFloat, and Magento will provide plenty of extra growth opportunities going forward.

Not-so-free market

Mercadolibre Inc (NASDAQ:MELI) is the largest online marketplace in Latin America. Calling it the region’s eBay Inc (NASDAQ:EBAY) is not far-fetched, given the fact that this last company owns an 18% stake in MercadoLibre and this last one, in turn, owns the company that used to be eBay’s Brazilian subsidiary.

Most of its revenues are derived from service charges and sales commissions, and from its payment system, MercadoPago, which is very similar to PayPal. Although its presence is quite widespread in the region, Argentina, Brazil and Venezuela contribute with most of the income.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

The 10 Most Peaceful Countries in the World

5 Big Reasons Communism Failed

The 15 Most Famous Carl Icahn Quotes

10 Scary Animals that are Actually Harmless

The 8 Most Famous Singer-Actors in Entertainment

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!