Yahoo stock dropped like a rock yesterday after they announced that the revenue from their advertising programs was expected to be lower than previously expected. As of the writing of this post, the YHOO price is sitting at just under $26.00 a share.
If I had the money, I’d be dropping it in YHOO right now. I don’t so I won’t. Oh, and I don’t currently own any either. So, this is merely an objective look at the stock followed by a recommendation to buy from someone with no experience in the field. You really must speak with your personal expert before following any advice I may give.
So, why is YHOO a buy in my book? Let me show you.
You can click on the chart at left to see a larger version.
What it will show are three things. The first arrow, to the left and above, shows the most recent extreme peak of the stock. The second, is the extreme dip it took when YHOO revised estimates in July. As you can see, it recovered partially, but not completely. The third arrow is the dip after yesterday.
Keeping in mind those spots on the chart, the 52-week moving high is $43.66. Just under double the current price. The 52-week moving low is $24.91. The stock is much closer to the moving low than the high. Yahoo is a strong company that merely revised their estimates of the revenue and profit from one section of their business.
The dip in price that we see today is merely an overreaction to the announcement yesterday. What we can expect in the near future is a return to prices in the $30 range and depending on the actual announcement of the financials, it could stay around there or could drastically move upward. If it were to take another dip at that time, it would return to $30 within 15 days or so.
This stock also has a great deal of potential for long term growth. From the current price of ~$25, it would be reasonable to expect the probability of a return in the 50% range to be fairly high. In fact, if you bought now, and it returned to it’s 52-week high, the return would be nearly 70%.
It could be a potentially really good buy at this price.
Are there any people more expert in the field than I who have a differing opinion? Or a similar one? I’d love to read them.
[tags]YHOO, yahoo, stock, stock pick, return, roi, buy[/tags]
{ 1 comment… read it below or add one }
I agree with you that YHOO is definately a buy right now.