The Numbers That Foresaw Yahoo!'s 'Stealth Rally'
I am enjoying stellar profits in a surprising name -- and this has inspired me, once again, to point out the utility of estimate revisions in finding your new buy ideas. CNBC pointed out recently that Yahoo! (YHOO) is in a "stealth" rally, having appreciated from $15.77 to $18.87 -- a 20% gain -- since late October. The rally is stealthy because no one pays much attention to Yahoo! anymore. They figure the company is a has-been in an Internet space dominated by Google (GOOG), Amazon (AMZN) and the like. While Yahoo! does have plenty of work to do, one cannot argue with the numbers, and the company's earnings prospects are getting better under new CEO Marissa Mayer.
Yahoo! popped onto my radar screen back in June. That's when my quantitative screens noted that the upward estimate revisions were strengthening, even as the valuation remained reasonable. The stock was trading at 16x the forward-four-quarter estimate for earnings per share, basically around a market multiple. For me, this was the catalyst in my decision to see whether Yahoo! had the potential to turn around its prospects....253 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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