EBAY

Best Idea Portfolio Holding Visa Is Off to a Fantastic Start in 2013

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Best Ideas Newsletter holding Visa (click ticker for report: ) announced stellar results for its fiscal year 2013 first quarter Wednesday afternoon. Revenue jumped 12% year-over-year to $2.8 billion, in line with consensus estimates. Earnings per share, net of a one-time tax benefit of $0.11, increased 22% year-over-year to $1.82 per share, a few cents higher than the consensus expected. Other than a litigation charge of $4.4 billion that the firm had to pay out during the first quarter, new CEO Charlie Scharf’s first quarter on the job went off without a hitch. Payments volume increased across all geographies, growing 3% year-over-year in the US to $544 billion, 13% (excluding currency) in Asia-Pacific to $313 billion, and 37% (excluding currency) in Central … Read more

Could the FCC Hurt Carriers’ Profits?

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Reports have surfaced that the FCC wishes to create a free, nation-wide WiFi network in order to facilitate web and cellular traffic. Though plans are only in the initial stages (and we are not jumping to any conclusions), the government could provide the US with a high-speed network at no cost, helping to put the nation on par with the Internet service achieved in several other countries. The news does not alter our fair value estimates for companies in our coverage universe, pending new details regarding probability and timing of implementation. Understandably, the companies that currently own spectrum and experience fantastic returns on networks are a bit upset about the possibility. The high margins achieved by wireless operators Verizon (click … Read more

MasterCard Posts Terrific Fourth Quarter Results

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Late last week, payment processor MasterCard (click ticker for report: ) announced terrific fourth quarter results. Revenue jumped 10% year-over-year to $1.9 billion, in line with expectations. Earnings, however, exceeded consensus estimates, growing 21% year-over-year to $4.86 per share. Much like Best Ideas Newsletter holding Visa (click ticker for report: ), MasterCard continues to ride secular tailwinds as the world moves to a cashless society. Though the US is MasterCard’s largest market, its credit card market share substantially lags that of Visa. Still, the company has tremendous global exposure. With credit and debit payments nearing maturity in the US, other markets (shown below) are driving the growth at MasterCard (Image Source: MasterCard Earnings Presentation). Although the company’s exposure to Europe may be … Read more

Amazon Reports Strong Sales Growth

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Online retail kingpin Amazon (click ticker for report: ) reported strong sales growth during its fourth quarter. Revenue jumped 22% year-over-year to $21.3 billion, slightly below expectations, but still strong. Earnings, as is the norm for Amazon, missed the mark, falling nearly 50% year-over-year to $0.21 per share. Although classic value investors and growth investors alike remain baffled by Amazon’s current price-to-earnings multiple (the firm posted a net loss for 2012), we do not think multiple analysis really tells the story at Amazon. Nor does near-term free cash flow, which was 81% lower on 7% higher operating cash flow during the period. Amazon is investing for the future, and given its current sales pace, we think the market is pricing in a dramatic rise in … Read more

Superb Growth Continues at Best Ideas Portfolio Holding eBay

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Not surprisingly, fantastic growth continued during the fourth quarter at Best Ideas Newsletter holding eBay (click ticker for report: ). Revenue surged 18% year-over-year to $4 billion, a touch better than consensus expectations. Earnings per share, on a non-GAAP basis, grew 17% compared to a year ago to $0.70. We continue to like this holding of our Best Ideas Newsletter portfolio. The continued resurgence of the core eBay business continued uninterrupted, as revenue surged 16% year-over-year to $2 billion, which coincided with 16% gross merchandise volume growth ($19.1 billion). While PayPal grabs all the headlines, the performance of eBay’s marketplace has been fantastic over the last several quarters. The eBay marketplace, in our view, has reached a similar positioning as … Read more

Dear Valuentum Member

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In such a short time that you’ve known us, you have seen us do so much: from generating more than 25 percentage points of outperformance in our Best Ideas portfolio since inception (May 2011) to delivering on our high-single-digit return goal of our Dividend Growth portfolio during 2012 to the Valuentum Dividend Cushion score predicting the dividend cuts of JC Penney (JCP), SuperValu (SVU), Roundy’s (RNDY), and others. You’ve seen us identify a triple in EDAC Tech (EDAC) and predict the bankruptcy of the parent of American Airlines (AMR). These are tremendous accomplishments. There’s an old saying in the market that if your winners are outperforming your losers, you’re doing a great job. Through November of last year, 87% of … Read more

Ecommerce Sales Surge During the Holiday Season

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It should be no surprise to Valuentum members that ecommerce sales were fantastic this holiday season as we continue to hold payment processors Visa (click ticker for report: ) and PayPal – via eBay (click ticker for report: ) – in the portfolio of our Best Ideas Newsletter. Digital business analytics firm comscore (SCOR) reported that for the first 51 days of the November-December 2012 holiday season, retail ecommerce spending advanced 16% versus the same period a year ago, a breakneck pace. Impressively, the data show that the 5-week work week ending December 21, 2012 registered a rate of expansion of 53% in spending. We continue to focus on high-VBI rated firms that are benefiting from long-term secular tailwinds, and … Read more

Solid Cyber Monday

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According to IBM Digital Analytics, Cyber Monday sales surged 26.6% year-over-year and are expected to total $1.5 billion. These results were consistent with our previous belief that the online channel would continue to become a more important retail destination, though we’re a bit surprised that growth was so strong on one day (since we’ve seen retailers run a variety of sales all week long). Two of the big winners yesterday appear to be Amazon (click ticker for report: ) and eBay (click ticker for report: ), where sales volumes increased 52% and 57%, respectively. Sources cite the percentage of retailers participating in Cyber Monday sales at 97%, or almost every company that sells products on the Internet. It’s not easy to … Read more

Who Wins in the Move to Online Retail?

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Over the weekend, turkey took a backseat to consumer spending with respect to the financial markets. According to ShopperTrak, total Black Friday sales dipped 1.8% year-over-year to $11.2 billion; however, online sales jumped 26% year-over-year to over $1 billion (ComScore). Due to the hyper-competiveness of the retail cohort during the holiday season, Black Friday (and Cyber Monday) has become more of an all-week promotional event. We expect online sales to continue be a driver of revenue expansion going forward, and we’ve identified a few names that we think will particularly benefit. Visa/Mastercard Although we prefer Visa (click ticker for report: ) from a valuation and brand strength perspective, it and Mastercard (click ticker for report: ) will be major beneficiaries of the … Read more