At the beginning of 2012, I set out to form The World's Greatest Growth Portfolio. Though I can't promise it will always live up to its moniker, the portfolio has returned 22% in just 10 months, besting the S&P 500 by about 9 percentage points.

A few weeks ago, I outlined exactly how I would go about building my portfolio for next year: Invest first and foremost in companies that demonstrate exceptional levels of innovation, with special emphasis given to those that I believe will be around decades from now.

Today, I'm going to take a deep dive into a stock that interests me -- eBay (EBAY 1.29%) -- evaluate how I think the company is doing, and tell you why it probably won't have a place in my portfolio. Read all the way to the end and I'll offer up access to a special free report on one of the most innovative industries out there.

A story of two businesses
When most people think of eBay, they think of the Internet destination where people can post things to buy and sell with the click of a button. This part of the business is important to recognize, as it brings in 53% of the company's total revenue. Over the past year, this segment has grown by 9.8% -- not bad at all when you consider it has been around for over a decade, and has serious competition from the likes of sites as simple as Craigslist.

The second part of the company -- the one that gets lots of investors excited -- is PayPal. For those who are unfamiliar with it, PayPal allows for convenient cash transfers from individuals and businesses to one another -- all without having to send a check or put in a credit card number.

Of course, it's a bit more nuanced than that, but "PayPal Accepted Here" signs are popping up at stores all across the country, providing some real competition to stalwarts like Visa (V 0.44%) and MasterCard (MA 0.42%).

Over the past year, revenues from PayPal -- the company takes a slice from each transaction -- grew to account for about 40% of the company's revenue. Even more impressive, that revenue has grown by 27% over the past nine months.

As the stock is trading today for about 17 times earnings and 29 times free cash flow, some people think the company is a buy right now.

But I see things differently
Let's be clear, I think eBay is a darn good company, and it might be right for lots of different investors; but there are three reasons this company won't have a part of my portfolio next year.

First, though the company's marketplace division -- the website where we buy and sell stuff -- has been performing really well, there are limits to its growth. eBay attempted before to enter the Latin America market, but was outmaneuvered by MercadoLibre (MELI 1.86%). eBay decided to join forces with MercadoLibre instead of fighting it, acquiring a substantial stake in the company. As it stands now, revenues from abroad now account for 52% of the company's intake, but the segment is growing slower abroad than stateside.

Second on my list is that the company doesn't necessarily fit very well with my investing thesis. As it stands, what I'm really looking for is innovation. About 10 years ago, the idea of PayPal was certainly an innovative one. But PayPal itself wasn't a product of eBay; the company bought the PayPal business back in 2002. I like the company's move toward payments in stores, but I'm not sure that's a winning strategy.

Which leads me to my final concern: competition. Google has had Google Checkout for quite a while now, but the company certainly has the cash to make more serious moves into the space; this is especially possible given the convenience of paying for things with Android smartphones. NXP Semiconductors (NXPI 1.49%) has already developed near-field communication, or NFC, technology that allows such transactions by simply swiping your phone near a checkout register.

Given all these concerns, I think there are better companies to fit in my growth portfolio. If you'd like to read about a few that I'm very excited about, check out our latest special free report: "The Future is Made in America."