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Is Yahoo (YHOO) A Good Stock to Buy Right Now?

Mayer has been working around the clock to give the company she heads a jumpstart. Yahoo! Inc has been facing stifling competition from other tech giants like Google Inc (NASDAQ:GOOG) and Facebook Inc (NASDAQ:FB). The idea of upping stakes in different stocks, rolling out spinoffs, and forging partnerships (like its recently inked deal with the National Football League which will see it broadcast an NFL game online) are some of the steps that Yahoo! Inc is taking to boost its performance and image. The company already entered into a partnership with Firefox to have the Mozilla Firefox browser optimized for its search service.

Yahoo! Inc. has also made several acquisitions to diversify its revenue base and improve its services. Some of the notable acquisitions that have shown great potential include Tumblr, Flurry, and Brightroll. Tumblr, for example, is a microblogging system that has realized strong growth over the past few years, reaching more than 400 million registered accounts. Mayer is confident that by the end of 2015, Tumblr will reach EBITDA profitability and that the unit will generate up to $100 million in revenue. The CEO’s acquisition spree has been fueled by pressure to redefine its image. The fact that there is money to fund such acquisitions presents an invaluable opportunity for the company to set a stage for healthier competition against its rivals. However, Smith insists that the acquisitions should leave out startups that will not add revenue to the company.

Among analysts, the stock is doing pretty well. Up to 27 analysts have given the stock a “Buy” rating with an average broker rating of 1.76 (between a “Strong Buy” and “Buy” consensus average rating). The company posted $0.15 in earnings per share in its most recent earnings report, missing analysts’ consensus estimate of $0.18. The stock has been given average earnings per share target of $0.77 for the current fiscal year. In conclusion, there are several reasons that make Yahoo! Inc. (NASDAQ:YHOO) a good stock to buy now. We believe a long position in YHOO hedged with a short position in BABA will probably generate positive returns.

Disclosure: None

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