The Internets had a strong session on Tuesday that reminded Gregory Spear of the good ole’ days for the space.
Re-discover this industry as it enters its strongest season, and discover a company that is distinguishing itself from the pack. Read about eBay, Yahoo, Cal-Maine, Eresearch and Taser. Gregory Spear is editor of The Spear Report Professional Edition newsletter. Click here for the full story exclusively on Zacks.com.
Here are the highlights from the Featured Expert column:
On Tuesday, 33 Consensus names rose on more than a 50% increase over average volume, with the Internets and short squeezes such as Cal-Maine, Eresearch and Taser leading the way, while the indices marked time.
As the overall market rests, Gregory Spear and his team are finding selective pockets of strength. That’s bullish, especially as we are near old highs and profit taking is tempting. While the chips rest, the Internets ran with the baton. It was a little like 1999 all over again, except we are now working with the survivors of the Dot Comedy and they are all making money. In fact, some are still growing revenues and earnings at a particularly impressive pace.
The Internets are entering their strongest season right now. Despite an overall 0.3% dip in August U.S. retail sales, online and catalog businesses posted a 1.7% sales gain. In addition, Yahoo announced the purchase of a digital music service and that sparked further speculation about the migration of the consumer to the virtual retailers. That is a typical seasonal fascination at this time.
In the last few weeks, however, eBay has distinguished itself, setting a new all-time high on Tuesday. But valuations are tricky when it comes to bidding on the fastest growing large-cap company in the world. Is eBay worth closer to the $50 billion it was priced at a month ago or the $62 billion it is priced at today? eBay, which appears to have won the auction wars, sports a PE of 98 but is likely to grow earnings about 50% year over year through 2005. Consequently, it continues to enjoy a hefty valuation premium. In the short term, the stock is likely to rally a bit further in front of its October earnings report and then sell off on the news.
Murdok | Breaking eBusiness News
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