If the American consumer is resilient in 2023, which stock should you buy? You’re probably thinking of Amazon (NASDAQ:AMZN) or Walmart (NYSE:WMT). Yet, there’s an under-the-radar pick that’s worth your attention and investable capital. I invite you to take a closer look at eBay (NASDAQ:EBAY) stock today, especially if you have a contrarian streak.
Sure, it requires courage to risk your money on an unloved company like eBay. However, if you’re serious about buying low and selling higher, then you’ll have to look outside of the “Magnificent Seven” market darlings. With that in mind, let’s see if eBay checks the necessary boxes for selective investors.
A Famous TV Personality Says EBAY Stock Is ‘Done’
I not among the group of “Cramer fader” traders who purposely do the opposite of everything that Mad Money host Jim Cramer recommends. However, I strongly disagree with Cramer’s stance on eBay.
Prior to Black Friday and Cyber Monday, Cramer declared that EBAY stock is “done” (or more precisely, that he’s “done” with eBay). As a contrarian, I start to get interested when commentators throw in the towel on a particular asset.
Was it reasonable for Cramer to (per TheStreet) cite “weak consumer demand” as a reason to be “done” with eBay? Data from Adobe Analytics seems to contradict Cramer’s concern about the U.S. consumer.
Reportedly, American consumers spent a whopping $9.8 billion online on Black Friday this year. That’s up 7.5% year over year. U.S. consumers spent $12.4 billion online on Cyber Monday, up 9.6% year over year.
Amazon’s top line will certainly benefit from this, but why shouldn’t it bode well for eBay, too? And frankly, despite Cramer’s declaration, I’m just not seeing “weak consumer demand.”
eBay’s Value-and-Yield Combo
Besides, even prior to Black Friday and Cyber Monday, eBay wasn’t in any real trouble. The company’s third-quarter 2023 GAAP net revenue grew 5% year over year, which is not spectacular, but not too bad. More impressively, eBay’s GAAP earnings flipped from a 13-cent loss per diluted share in the year-earlier quarter to income (not a loss) of $2.46 per diluted share in Q3 2023.
Moreover, eBay appears to be relatively underpriced or at least reasonably priced. Notably, eBay’s GAAP-measured trailing 12-month price-to-earnings ratio of 8.27x is roughly half of the sector median P/E ratio of 16.47x.
On top of all that, eBay pays a forward annual dividend yield of 2.4%. This ought to appeal to passive income investors, as the consumer cyclical sector average dividend yield is around 1%. Hence, eBay offers a powerful combination of value and yield, just in time for the December holidays.
EBAY Stock: Ignore the ‘FUD’
All of this just goes to show that when stocks trade near their 52-week lows, some commentators become wary while others see opportunities. Instead of succumbing to the “FUD” (fear, uncertainty and doubt), you can conduct your due diligence on eBay.
With all due respect to Cramer, I’m not “done” with EBAY stock, not even close. The American consumer appears to be quite resilient now, and eBay’s quarterly results weren’t bad at all. Consequently, for a compelling value-and-yield holiday-season combo, consider a share position in eBay today.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
