If you're hungry for a conversation starter the next time you're chatting with some stock savvy folks, I have a little ice breaker for you:

Google (Nasdaq: GOOG) and eBay (Nasdaq: EBAY) are both trading at 14 times next year's projected profitability. Which one would you rather buy?

Deutsche Bank analyst Jeetil Patel has already made his choice. He reiterated his "buy" rating on Google yesterday, with a $725 price target that is more than 25% higher than where the world's leading search engine is presently perched. He reiterated his "sell" rating on eBay, tagged with a $22 price target that is well below where the leading web-based auctioneer is being bid up these days.

Patel argues that investors have been bidding up e-commerce giants over the content heavies. There's been far greater multiple expansion at eBay than Google since the market bottomed out two years ago. The same can also be said for Amazon.com (Nasdaq: AMZN) on the e-commerce side and Yahoo! (Nasdaq: YHOO) on the content front, according to Patel.

I agree with Patel's conclusion. I realize that Google and eBay are both active newsletter recommendations around here, but I'd be siding with Big G if I was looking for greater capital appreciation at this point. However, I'm not entirely sold on the market fancying commerce over content.

The pro-Google argument
Google isn't the growth demon it used to be, but it's still a speedster pitted against eBay. Let's go some analyst projections over the next two years.




2011 P/E 17 16
2011 EPS Growth 17% 12%
2011 Rev Growth 23% 14%
2012 P/E 14 14
2012 EPS Growth 16% 12%
2012 Rev Growth 18% 13%

Source: Yahoo! Finance.

It doesn't matter if you pick the top or bottom line, eBay's trading at a premium to its growth rate. The same can't be said for Google.

There may be concerns out there that folks camping out on Facebook or Twitter will make portals less relevant, but analysts obviously bake all of that in during the modeling process. See how revenue is growth faster than earnings in a seemingly scalable industry? The margin erosion is proof that analysts aren't taking anything for granted at Google.

However, the pros see revenue growing faster than profitability at eBay as well. Let's not read too much into eBay.com itself. Despite its corporate moniker, PayPal is the real growth driver these days. eBay's marketplace transaction revenue has grown at a mere 3% clip during the last couple of quarters.

The anti-eBay argument
One can argue that Craigslist and Web 2.0 transaction enablers have been a bigger burden on eBay.com than any social media flypaper have been to Google. The numbers prove it.

However, let's not assume that PayPal will forever be a Teflon-coated darling to overcome the meandering ways of eBay's namesake marketplace.

PayPal rocks, but isn't Facebook also building up a payment platform? We can't be too far away from the day when I can use Facebook credits to buy a real pizza.

Beyond Facebook, the credit card issuing giants are finally starting to wake up. Just last week, Visa (NYSE: V) announced that it would be teaming up with CashEdge and Fiserv (Nasdaq: FISV) to launch a new personal payment service. By the latter half of the year consumers will be able to send payments directly to a recipient's Visa account by entering the account number, email address, or mobile phone number.

The anti-thesis thesis
Google isn't perfect, but it should give investors a bigger bang for their buck at this point.

Let's not get all swept up into bigger picture trends that aren't really there. Commerce vs. content? Amazon vs. Yahoo!? Why even go there?

Amazon's valuation is expanding because it's a fiscal beast. It's growing at a torrid pace, gobbling up market share from real world retailers. Multiples are also expanding because margins at Amazon are being squeezed in the near-term as it cranks out low-margin Kindle readers.

It's the other way around at Yahoo! where earnings more than doubled during the holiday quarter despite a slight top-line dip. Conflicted investors don't know which gauge to follow, so its multiple will contract as earnings improve. Analysts see revenue and earnings declining a bit this year at Yahoo!, so it's not really a fair match to Google anyway.

Amazon and eBay also aren't joined at the hip for the e-commerce parade since Amazon's sales soared a whopping 36% during the holiday quarter.

There's no need to flesh out armies here for a battle between online niches. We can send eBay and Google into the ring to fight for themselves.

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Google and Visa are Motley Fool Inside Value recommendations. Google is a Motley Fool Rule Breakers selection. Amazon.com and eBay are Motley Fool Stock Advisor picks. Yahoo! is a Motley Fool Global Gains recommendation. The Fool owns shares of Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Longtime Fool contributor Rick Munarriz is a satisfied eBay user with 178 positive feedbacks to show for it. He does not own shares in any of the companies in this story. He is also a member of the Rule Breakers analytical team, seeking out the next great growth stock early in its defiance. The Fool has a disclosure policy.