One of Warren Buffet’s guiding principles is to invest in things you use and understand. This strategy has proven to be of great success, but it is difficult to find companies that is of good value. In today’s bullish environment, it is becoming a challenge to find these types of companies at bargain price. Fortunately, there is one company you probably are using on a daily basis and is a major internet play. What's more interesing is the stock is currently trading at a bargain compared to its competitors. The company is Yahoo! This company is in the same position as Microsoft was earlier this year. In May, MSFT’s stock was trading around $23/share. Today, MSFT is almost $30/share. If you recall, in May 2006, Wall St. was disappointed when the company announced it will spend an additional $2 billion in R&D. This caused Wall St. to question the company’s future and sell off; six months later, MSFT stock has more than recovered.
Last quarter, Yahoo! delayed the release of its highly anticipated Panama platform, which is expected to do a better job of monetizing its search traffic; the stock tumbled from $29 to $24. Albeit a little, the company launched Panama in Q4. While the company has much to prove in its quest to challeng Google, the company appears to be on the right track. The current range in which Yahoo! is trading is an opportunity that doesn’t come around very often. YHOO at $26/share represents a buying opportunity. This is similar to when MSFT was trading at its 52 week low earlier this year. Look, Yahoo! has too much presence on the Internet to simply go away. The worse that could happen here is another company ends up buying YHOO. My view is the company will make it and be able to capitalize on its market position. This stock should be in the mid 30’s in 4 months.
ibooyah on squidoo.com
