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eBay Revisited While Waiting to Buy

Sjuggerud writes, "Gary Shilling might have the best track record of any investor over the last 30 years...If you had invested $100,000 in Shilling's 'big idea' 30 years ago, it would be worth over $6 million today."

Gary Shilling, according to Sjuggerud, kept his focus on his "big idea." "While most investors didn't pay attention to his big idea, Shilling was right. And he never gave up on his big idea," Sjuggerlund added. That's the way the most successful, legendary thinkers have always charted their course.

Whether it's with companies like EBAY, or in "Finding Stocks Whose Time Has Come", we're compelled to be both insightful and visionary so we won't overpay but buy smart.

At over 17 times 2013 projected earnings, value hunters wouldn't necessarily call EBAY a bargain. Yet, when compared to another e-commerce superstar like (AMZN), which recently traded as high as 163 times its forecasted 2013 earnings, EBAY might still look quite attractive.

Continued revenue growth will be the key to the immediate future of EBAY's share price. Since its core "Marketplace" business saw its transactions margin rise to nearly 77% last quarter, revenue growth is much more likely to follow.

According to the company, active registered accounts rose to 117.4 million compared to the same year-ago quarter when that number stood at 103 million. Then there's the revenue EBAY is enjoying through GSI Commerce, which it acquired in 2011.

GSI provides technology to help other companies' e-commerce enterprises. Instead of the blind leading the blind, with GSI EBAY has the superstar of e-commerce helping other companies follow EBAY's profitable lead. It's a great match that will drive EBAY's earnings per share in the quarters ahead.

It wouldn't surprise this analyst to see EBAY shares drift closer to the lower range of The Bollinger Bands. That may give us a chance to be a buyer nearer to $50 a share. If shares corrected 9% from Monday's closing price of $55.95 we'd experience a tempting buy-limit price of $50.92.

Don't be fearful, just be careful. Review and reacquaint yourself with the ways EBAY drives its revenue higher and higher. Then pick a share price that looks fair to you and, as I like to say, don't chase the stock but let the stock come to you. Good fishing, due diligence and best results!

At the time of publication the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Make smarter trading decisions and provide investment ideas that could help make you richer. Bryan Ashenberg does the dirty work so you don't have to!
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