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Superficial Pop Gives Yahoo Shareholders a Good Out

An article claiming YHOO is 'getting noticed again' caused the stock to rally

   

Yahoo (YHOO) — This large-cap technology company is one of the world’s largest providers of content and search services. I recommended it as one of the Top Stocks to Buy for May with a six-month target of $30, mentioning that its investment in Asian companies could add to future earnings.

On July 18, with the stock near my target, I suggested traders consider taking profits but that investors should continue to hold. The stock fell to under $27.

On Tuesday, it popped to a high of $31.66 following a post on Minyanville that mentioned Yahoo was being “noticed again” thanks to CEO Marissa Mayer. But getting noticed and achieving outstanding profits are quite different. Analysts look for earnings of $1.47 per share this year and $1.67 in 2014.

At 19 times next year’s earnings, the current price is rich, and so a pop due to the publicity gained from an Internet article seems like an ideal time to again lock in profits. Long-term investors should take defensive measures like selling options against current positions.

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Article printed from InvestorPlace Media, http://investorplace.com/2013/09/trade-of-the-day-yahoo-yhoo-2/.

©2014 InvestorPlace Media, LLC

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