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The Multibillion Dollar Revolution That's Just Warming Up

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Andrew Tonner: One of the big storylines we saw get off-and-on coverage throughout 2012, but I think no one disputes as real disruptive potential, is mobile payments. This potentially could be a hundreds-of-billion-dollar industry, but it still is kind of taking shape.

Do you guys think it's going to be investable in 2013, and if so who are your picks for it?

Austin Smith: I think it's investable now. I think you could have made a tidy sum on it in 2012. We saw eBay be one of the sleeper tech stocks of the year, and just put up an incredible run, basically on the back of PayPal adoption.

This is a segment of the consumer goods space that's absolutely growing like wildfire. You don't normally get that in the consumer goods space, but everyone's talking about online retail -- and that's growing at 26% a year, which is fast enough -- but mobile payments are growing at 190% a year, roughly.

If you look at PayPal's volume on Cyber Monday, they saw 193% volume increase. On Black Friday their volume was up 3X over the year before. These are pretty crazy growth rates.

You look at a company like eBay, of which PayPal is 50%, and it's only trading for 17X earnings. They have wide margins so my pick, if you can't tell, is probably eBay to play this. There are other players in this space.

Google tried to get into it. They sort of fell off a little bit. Square is probably one of the biggest competitors in this space but you can't invest in them directly, although they are definitely a threat and a force in this space, so if you are investing you need to keep an eye on what they're doing.

Eric Bleeker: As an aside, my Dad asked me for a tech stock that's done really well in the last year. He was interested, and I mentioned eBay and he laughed and just thought I was joking. A lot of people don't even realize how big the mobile payment thing is with PayPal. To him, he just thought, "Who goes on eBay anymore?" Well...

Andrew: A lot of people.

Eric: Their mobile payment system is great!

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