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Yahoo Looks Like a Strong Buy-and-Hold Candidate

An increase in its share buyback plan and a bullish chart make YHOO attractive


Yahoo (YHOO) — This large-cap information technology company is one of the world’s largest providers of content and services. I recently featured it as one of my Top Stocks to Buy for December, and it was previously recommended on the May list at under $24 with a six-month target of $30, when I mentioned that its investment in Asian companies could add to future earnings.

Then, on July 18, at close to $30, I suggested that traders who bought the stock at $24 consider taking profits, but that investors should continue to hold.

Analysts’ consensus estimates are for earnings of $1.46 per share in 2013 and $1.66 in 2014. At 22.3 times next year’s earnings, the current price may appear rich; however, a recently announced $5 billion increase in its share buyback plan reduces the number of shares outstanding, thereby potentially increasing earnings per share. The company last announced a $5 billion share buyback in May 2012, when the stock was trading at just $15 a share.

Support is currently at its 50-day moving average at $34. Buy and hold YHOO for long-term appreciation.

YHOO Chart
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Chart Key

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