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

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Top 10 Highest Paying Jobs in the World

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!