Trade Ideas: Yahoo! (YHOO)

By Jul 18, 2013, 9:14 AM Author's Blog  

Yahoo (YHOO) jumped to a five-year high Wednesday after the company said during its Q2 earnings report that Alibaba’s profit tripled in the first three months of the year. Yahoo has a 24% ownership stake in the privately held Chinese e-commerce company Alibaba Group Holdings. Shares of the Sunnyvale, Calif.-based web portal gained 10.34% to $29.66 at 4.00 p.m. in Nasdaq for the highest intraday price since May 2008.

Technically speaking, Yahoo has seen several upgrades recently and the stock has been in a steady uptrend since Sept. 2012. After a four month consolidation phase started in May of 2012, it has stair-stepped its way up from under $15 a share to over $29 a share. YHOO is up 12.86% in the last month, up 48% in the last six months, and up $13.92, or 89%, since this time last year. While the name may be short-term overbought here — YHOO’s share price has an RSI value of 73.15 — any pull back should be seen as another consolidation phase with an upward bias.

Unless key support levels currently at $29 and $27.07 are convincingly penetrated, the buy the dips strategy is still the higher probability trade. We believe the stock will continue to steadily uptrend given that both its trailing P/E and forward P/E ratios are at 8.60 and 17.80, respectively. Yahoo’s earnings are expected to increase over 14% in FY 2014 and at an average of 10.50% annually for the next five years.

Trade Ideas: Yahoo! (YHOO)

The longer the ticker holds above its all time closing high of $29.66, the greater odds we could see higher prices moving forward.

$32.50 is our short-term target to the upside.

Disclosure: No Position

  • SHARE:
  • Share on StockTwits


SPY198.39  chart+1.03  chart +0.52%
GOOG586.86  chart+4.70  chart +0.81%
AAPL100.53  chart+1.37  chart +1.38%
TSLA256.76  chart-3.18  chart -1.22%
BBRY9.85  chart+0.095  chart +0.97%
NFLX468.15  chart+2.15  chart +0.46%
FB75.29  chart+0.70  chart +0.94%

Nikkei15454.45  chart+4.66  chart +0.03%
Shanghai0.00  chartN/A  chartN/A
UK6758.53  chart-20.78  chart -0.31%
France4236.92  chart-17.53  chart -0.41%
Germany9300.03  chart-34.25  chart -0.37%