One glance at YY Inc’s (YY) chart might lead you to believe that the stock’s 240% year-to-date climb has been too much, too fast. Heck, the Chinese Internet midcap went public late last year for $10.50 a share, and has already hit $45.
But I think this $2.5 billion company is just getting started.
YY provides a social platform to Internet users in China — a huge and growing pool of customers. China’s Internet penetration rate is currently estimated at 40%, meaning there’s plenty of room for growth. Not to mention, YY is working hard to diversify its offerings and audience with new partnerships and offerings.
And with YY trading above its 20-, 50- and 100-day moving averages, why not play the mega-trend by riding an uptrend?
If you want fundamentals to back up the pick, just consider that YY has beat earnings expectations every quarter since it went public. It also is slated to double its revenue during 2013, while full-year estimates for 2013 and 2014 have been marching steadily upward in the past few months.
When you factor in growth potential, this midcap stock looks like a bargain. YY is trading for 26 times forward earnings, but is forecast to grow earnings by 47% annually over the next half-decade.