Superficial Pop Gives Yahoo Shareholders a Good Out

by Sam Collins | September 25, 2013 1:49 am

Superficial Pop Gives Yahoo Shareholders a Good Out

Yahoo (YHOO[1]) — 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[2] with a six-month target of $30, mentioning that its investment in Asian companies could add to future earnings.

On July 18[3], 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[4] 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.

09 25 13 yhoo 300x201 Superficial Pop Gives Yahoo Shareholders a Good Out
Click to Enlarge

chart key 300x84 Superficial Pop Gives Yahoo Shareholders a Good Out[5]

Endnotes:
  1. YHOO: http://studio-5.financialcontent.com/investplace/quote?Symbol=YHOO
  2. Top Stocks to Buy for May: http://investorplace.com/2013/04/top-stocks-to-buy-clmt-cern-hig-ilmn-ufi-yhoo/view-all/
  3. On July 18: http://investorplace.com/2013/07/trade-of-the-day-yahoo-yhoo/
  4. post on Minyanville: http://www.minyanville.com/sectors/technology/articles/Yahoo-Is-Getting-Noticed-Again-yahoo/9/24/2013/id/51904
  5. [Image]: http://investorplace.com/wp-content/uploads/2013/05/chart-key.gif

Source URL: http://investorplace.com/2013/09/trade-of-the-day-yahoo-yhoo-2/
Short URL: http://invstplc.com/1fuAVol