Yahoo! Inc. (YHOO): This Underdog Could Deliver Double-Digit Gains for Traders Who Buy Now

When you think about Internet search engines, I suspect that the first company that comes to mind is Google (NASDAQ: GOOG). I know that’s my first thought, as the Google website is even set as my personal homepage. Yet when it comes to recent traffic metrics, as well as share price performance over the past 12 months, Yahoo! Inc. (NASDAQ:YHOO) is beating up on its biggest rival.

On the traffic front, we got news from industry tracking group comScore showing that in terms of the number of unique monthly visitors in July, Yahoo! Inc. (NASDAQ:YHOO) actually bested Google for the first time since May 2011.

According to the comScore traffic data, Yahoo! Inc. (NASDAQ:YHOO) received 196.6 million monthly unique visitors. That number beat Google’s 192.3 million in July. Moreover, Yahoo! Inc. (NASDAQ:YHOO)’s number didn’t include unique visitors from the recently acquired Tumblr blogging site, which had 38.4 million unique visitors in July.

The traffic data was a surprise to many social media watchers, including Ed Barton, director of digital media at technology consulting firm Strategy Analytics. Commenting in an interview with CNBC, Barton said the Yahoo! Inc. (NASDAQ:YHOO) numbers were “incredible” and a “pretty strong endorsement” for Yahoo CEO Marissa Mayer.

marissa mayer waving flag

“No online media outlet would have come close to predicting this, and if they had, you would have said they were insane,” remarked Barton. As for Yahoo’s stock, he said, “This will probably have a positive impact on the share price and if Yahoo keeps this up, it has a chance of becoming relevant again.”

Indeed, there’s nothing irrelevant about the performance of Yahoo! Inc. (NASDAQ:YHOO) shares over the past year. In fact, we see it trouncing Google, with YHOO up about 77% during the past 52 weeks versus GOOG’s 23% gain.

While some of this relative outperformance has to do with Google shares being somewhat tired after a stellar five-year run, there is no doubt that the optimism about Yahoo’s turnaround under the leadership of Mayer has caused the smart money to bet on YHOO.

Mayer has made a lot of headlines with some of her high-profile changes, including the aforementioned Tumblr acquisition, the ban on Yahoo employees working remotely from home, and the company’s policy of extended maternity leave benefits.

More importantly, however, is Mayer’s bottom-line business acumen. She talked about that in a recent Vogue interview. Mayer stated that Yahoo has plans to prevail as the transition from traditional desktop PCs to mobile devices such as tablets and smartphones continues its inevitable march.

In the Vogue interview, Mayer said that mobile customers want, “Email, maps, weather, news, stock quotes, share photos, group communication, sports scores, games… it sounds like a list of what Yahoo does.”

Now, from a technical perspective, YHOO shares saw a 3% bounce in early Thursday trade following the comScore news. The stock now sits comfortably above its 50-day moving average, while trading just below its 52-week high.

YHOO Chart

I suspect that if Yahoo’s traffic metrics continue to improve, and if it can show that it was able to monetize that traffic in the coming quarter when it reports earnings in October, then traders are looking at a potential big winner at current price levels.

Recommended Trade Setup:

– Buy YHOO at the market price
– Set stop-loss at $25.66, approximately 8% below the current price
– Set initial price target at $32.08 for a potential 15% gain in two months

$1,000 Per Month Trading System

You could collect $1,000 or more per month without buying a single stock. Click here to learn how…

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

The 10 Most Peaceful Countries in the World

5 Big Reasons Communism Failed

The 15 Most Famous Carl Icahn Quotes

10 Scary Animals that are Actually Harmless

The 8 Most Famous Singer-Actors in Entertainment

The 10 Longest Wars of All Time

The 13 Worst Looking Foods that Taste Great

The 6 Most Gruesome Injuries Suffered During a Sports Match

The 20 Biggest Contracts in MLB History

The 7 Worst Blown Calls in Sports History

7 Free Ways to Advertise Your Business Online

The 18 Best R&B Songs of the 90’s

The 10 Most Dangerous States to be a Cop

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!