YHOO: Too Rich for Investors, Too Weak for Traders

by Sam Collins | October 17, 2013 1:24 am

YHOO: Too Rich for Investors, Too Weak for Traders

Yahoo (YHOO[1]) — This company is one of the worlds largest providers of content and services. I recommended in my Top Stocks to Buy for May[2] under $24 with a six-month target of $30, mentioning that its investment in Asian companies could add to future earnings.

On July 18[3], at close to $30, I suggested that traders who bought the stock at $24 consider taking profits, but that investors should continue to hold. The stock fell to under $28, but then rallied to a new high at $35.

I again recommended traders sell on Sept. 25[4], and I advised long-term investors to take defensive measures like selling options.

On Wednesday, YHOO fell on high volume on a strong day for the market, which is a poor technical event. Analysts look for earnings per share of $1.47 this year and $1.67 in 2014. At 22.5 times this year’s earnings and 19.8 times next year’s earnings, the current price is rich.

I’m adjusting my buy under price to $30, where it is a worthwhile long-term investment. Traders should sell current positions at $33.50 or above.

10 17 13 yhoo 300x196 YHOO: Too Rich for Investors, Too Weak for Traders
Click to Enlarge

chart key 300x84 YHOO: Too Rich for Investors, Too Weak for Traders[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. on Sept. 25: http://investorplace.com/2013/09/trade-of-the-day-yahoo-yhoo-2/
  5. [Image]: http://investorplace.com/wp-content/uploads/2013/05/chart-key.gif

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