3 Stocks That Look Just Like eBay in 1998

When eBay held its initial public offering in 1998, investors rightly embraced the company as the world's most dominant online marketplace in the early days of the internet. And even now, eBay is trading close to its all-time highs after posting record holiday results and five straight quarters of accelerating marketplace volume growth.

All told, eBay stock has soared nearly 4,800% over the past two decades -- and that doesn't count its spinoff of PayPal in 2015, which gave investors one share of PayPal for each share of eBay they owned at the time.

But that raises the question: Are there any stocks on the market today that look like eBay did in 1998?

We asked three Motley Fool investors exactly that. Here's why they singled out Impinj (NASDAQ: PI), Universal Display (NASDAQ: OLED), and Mazor Robotics (NASDAQ: MZOR).

A huge rebound in the making

Anders Bylund (Impinj): Twenty years ago, eBay was a tiny niche business trying to make a business out of this newfangled internet thing. As we all know, that idea worked out nicely and shareholders reaped some massive rewards in the process.

Today, I get a very similar vibe from Impinj. Only time will tell whether the RAIN radio-frequency ID specialist's future returns will match eBay's early days, but the stock stands a good chance of doing so from the highly spring-loaded current position.

The rampant revenue growth that helped Impinj shares triple in value in its first 11 months on the public markets has stalled in recent quarters. As a result, the stock has lost its high-growth valuation multiples and share prices have tumbled a heart-stopping 77% below those summer highs. These days, you can buy Impinj shares at just 2.4 times the company's book value -- a bargain-basement price usually reserved for either deep-discount value stock or impending bankruptcy disasters.

CEO Chris Diorio argues that Impinj's troubles are temporary in nature. A handful of huge customers built their RFID tag supplies much too quickly in early 2017 and still have to work through those bulging warehouse shelves before placing any new orders. That situation should reverse somewhere in the back half of 2018, opening the door to fresh growth in Impinj's largest segment again.

Meanwhile, the company's unique and cutting-edge RFID readers and data analysis systems are receiving interest from brand new markets. Diorio sees an opportunity to turn several entire industries upside down and inside out by providing tools to run the business in a more efficient way. These opportunities include healthcare, airlines, automotive computing, and laundry services.

Two decades from now, I'm sure that RFID tags will be all around us. Impinj is still a leader in this evolving space and stands a great chance of emerging at the clear long-term winner. There will always be speed bumps and short-term challenges, but there's nothing wrong with Impinj's actual business. So if you get started with this potential long-term winner at today's low, low prices, I think you'll give eBay's golden years a run for the money.

Take advantage of this pullback

Steve Symington (Universal Display): Maybe Universal Display doesn't look exactly like eBay did shortly after its IPO in 1998. After all, Universal Display technically went public two years earlier. The organic light-emitting diode (OLED) specialist, though, didn't truly start to gain traction with many investors until it signed a long-term license and material supply agreement with its largest customer, Samsung Display, in 2011 -- an agreement that the two companies only just renewed last month. Also more recently, Universal Display struck long-term deals with the likes of LG Display and China-based BOE. So its flagship technology is found in millions upon millions of OLED smartphones, televisions, and wearable devices.

But I also know that eBay has endured its fair share of nasty pullbacks en route to rewarding patient, long-term shareholders. As it happens, after hitting an all-time high of $209 per share in January, Universal Display stock has since fallen nearly 50% for two reasons: First, almost exactly a month ago, shares plunged when the company announced strong fourth-quarter 2017 results, but followed with seemingly conservative guidance for the coming year due to earlier-than-expected inventory building efforts from certain customers. As I wrote at the time, however, Universal Display is still early in a multiyear growth cycle, so shifting some revenue from quarter to quarter shouldn't negatively affect its long-term story.

Then a few days ago, Universal Display stock dropped yet again on reports that Apple is developing its own displays with competing technology that could replace the OLED displays that it's currently sourcing from Samsung Display for its high-end iPhones. Here again, however, those reports note that Apple is in the early testing phases of the technology and nearly discontinued the project given manufacturing difficulties. And even if it does succeed, we won't see a finished product for several years yet, and Apple is likely to keep the technology to itself.

Finally, as Anders wrote a few months ago, Universal Display investors should be even more excited for the potential of OLED lighting, which promises to grow into a multibillion-dollar business opportunity for the company in the coming years.

Long story short, nothing has happened over the past couple of months to break Universal Display's long-term story. And I firmly believe that its steep drop is a golden opportunity for investors to open or add to their positions.

A ramp up in robotics

Todd Campbell (Mazor Robotics): If you're thinking robotic surgery is science fiction, you're wrong. Robots are already being used to assist surgeons in many procedures, and while Intuitive Surgical is a Goliath in laparoscopic surgery, a partnership with Medtronic PLC is establishing Mazor Robotics a standard in spine surgery.

Mazor Robotics manufacturers the Mazor X, a system used in spine and brain procedures that can limit surgical errors and improve recovery times.

A co-marketing relationship with Medtronic expanded last year, leaving Medtronic with sole responsibility for marketing the Mazor X globally. Mazor Robotics couldn't hope for a better partner. Medtronic is a surgical products giant with a team of specialists that already calls on spine surgeons.

It appears Medtronic's hit the ground running.

In 2017, full-year sales jumped 78% year over year to $64.9 million, including sales of $17.4 million in Q4, up 38% year over year. In Q4, Medtronic sold 21 Mazor X systems and thanks to more systems being in place, Mazor Robotics revenue from high-margin consumables used inMazor X procedures soared 107% year over year.

The Q4 sales growth and declining operating costs due to transferring its sales team to Medtronic allowed Mazor Robotics to turn the corner to profitability, too. EPS clocked in at $0.01 in Q4, and in 2017, the company's non-GAAP net loss per share improved to $0.12 from $0.36 in 2016.

Admittedly, Mazor Robotics isn't a cheap stock. But it's early innings yet for the company and profitability should increase as more systems get used in more procedures. If I'm right, then Mazor Robotics could grow into its valuation in the same way that eBay did over the past 20 years.

Oh, and one more thing: There's also an outside shot at an acquisition. As part of their agreement, Medtronic already owns 10.6% of Mazor Robotics and it has warrants that eventually could increase its ownership stake to 14.2%.

The bottom line

It's impossible to guarantee that these three stocks will be able to duplicate eBay's incredible post-IPO returns. But Universal Display, Impinj, and Mazor Robotics are all promising businesses operating in the earliest chapters of their respective long-term growth stories. For investors willing to buy now and watch those stories play out, we think the chances are high that you'll be more than pleased with your decision years from now.

10 stocks we like better than Universal DisplayWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Universal Display wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of March 5, 2018

Anders Bylund owns shares of Intuitive Surgical and Universal Display. Steve Symington owns shares of Universal Display. Todd Campbell owns shares of Apple and Impinj. The Motley Fool owns shares of and recommends Apple, eBay, Intuitive Surgical, and Universal Display. The Motley Fool owns shares of Medtronic and has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool recommends Impinj and Mazor Robotics. The Motley Fool has a disclosure policy.