Top Stock to Buy #6 – Yahoo (YHOO)
Yahoo (YHOO) is one of the world’s largest providers of content and services. I recommended it in the Top Stocks to Buy for May at under $24 with a six-month target of $30, mentioning that its investment in Asian companies could add to future earnings.
On July 18, at close to $30, I suggested that traders who bought the stock at $24 should consider taking profits but that investors should continue to hold.
Analysts’ consensus estimates are for earnings of $1.46 for 2013 and $1.66 in 2014. At 22 times next year’s earnings, the current price may appear rich; however, a recently announced share-buyback plan of $5 billion reduces the number of shares outstanding, thereby potentially increasing earnings per share. Yahoo last announced a $5 billion buyback in May 2012, when the stock was just $22 a share. Support is currently at its 50-day moving average at $33. Buy and hold YHOO for long-term appreciation.