Yahoo! (YHOO) to be 2007 stock of the year
A proven method of selecting which stock to invest in is to buy positions in companies that provide the products and services we use on a daily basis. When it comes to the internet, we remain bullish on Yahoo! (YHOO). While Wall St. has basically given up on YHOO and rightfully so given 2006 was a terrible year for the company, we believed 2007 could turn out to be a great year. Here are some reasons we believed YHOO is worth your time:
- The company is still the number #1 site on the internet. The majorities of folks remains loyal to Yahoo! and spends a good amount of time on the Yahoo! Network.
- Yahoo! monetization of its network will be much better in 2007 as the company has renewed its focused on key projects. The recent management change is a positive sign.
- Yahoo! Panama Ad platform is slick. We’ve seen it for ourselves. It takes only a few minutes to sign up and get started. Our opinion is Panama is as good, if not better than Google’s. Recent feedback on various boards concerning Panama is that is doing much better than expected in terms of click thru rates.
- The stock is close to its 52 week lows. This in our opinion represents a buying opportunity. There are many companies that would be interested in buying Yahoo! if it falls any lower, Microsoft being the most likely suitor as it has been losing market share in search. In this respect, it’s like having an insurance policy.
- The current state of Yahoo! reminds us of MSFT a year ago. Their stock (MSFT) was trading at around $23. Once Vista was on track, the investment community changed their view. The negative press quickly turned to positive tone. As a result, MSFT is now trading close to $30/share. We believed the investment community is now starting to change their tone on YHOO.
Trading at around $25/share, we believed YHOO has hit bottom. If YHOO is able to execute their strategy of customer focus and increase monetization, we believed this stock will be in the mid 30s by June 2007.
Finally, it’s important to remind ourselves as individual investors that we won’t benefit from any gain if we wait for Wall St. to upgrade the stock. We must seize whatever opportunity is available. We must remind ourselves that buying when everything is hunky dory is usually too late. Based on our view of the internet sector, Yahoo! is an under appreciated company, which represents a buying opportunity.
As always, we welcome your feedback. Have a great New Year!
Comments
Why is Yahoo's forward P/E is lot more than P/E? Does that mean it is going to loose more money in the next year?
P/E: 32.17
F P/E: 41.53
Posted by: Ravi | December 28, 2006 11:24 AM
Ravi, The F P/E of 41.53 indicates optimism in the stock. Basically means the street believed the stock will be worth more in the future.
Posted by: Anonymous | December 28, 2006 11:31 AM
I guess that prove that yahoo will be the stock for 2007. Best time to buy when everyone is bashing it.
Posted by: Ron Mexico | December 28, 2006 08:49 PM
I remember when BYD was just 4 5/8 and now its 45 +
Just can't see Yhoo or RAD
being so low. I don't care how long it takes--I'm sticking with these 2 !
Posted by: Michael Bell | December 29, 2006 05:57 AM
Good call.. ibooyah.. in no time we going to see this stock go back to the mid 30's and then wall street will fall in love with this stock once again..
Posted by: Ron Mexico.. | January 10, 2007 12:41 PM
Ron, thanks for the comments, we appreciate it. Our goal here is simple, to help people make money by sharing our thoughts and ideas. Thanks for visiting - Good Luck!
Posted by: ibooyah | January 10, 2007 01:26 PM
I hope to see some of this insight play out today when 4th quarter earnings are out. With any luck, this might boost investor confidence. Hopefully President Bush's address will not dampen potential investor excitement.
Posted by: Josh | January 22, 2007 09:37 PM