Yahoo has rewarded me very well since I talked about it about 2 years ago.Yahoo has increased more than 100% since then. You can find the the latest one here. With this kind of value already added, is it running near its end of momentum? Far from it! Actually I bet Yahoo may have another 100% to go in the next 1-2 years. Here is why.
Right now, Yahoo is trading hands at $37 with a market cap of around $37 billion. The Wall Street estimates Yahoo's intrinsic value around $12 billion. In other words, Yahoo seems quite expensive as it is priced at about 3 times its book value. But I think the Street has again largely undervalued Yahoo, as much as they did 2 years ago. Ironically, the situation for Yahoo has not really changed in the past two years but it seems the Street just could not figure this out. As I told you 2 years ago, Yahoo has a huge stake in the Chinese leading online retail (about one quarter of Ali Baba shares) and in the Yahoo Japan (about one third of the company shares). Per the current values of these two companies, they are worth over $30 billion already, almost equvilent to the value of the whole Yahoo market cap. In other words, the Wall Street again counts Yahoo's core Internet business as nothing. But as you must have also known, Yahoo is reviving under the leadership of Marissa Mayer and its own business is booming fast. That's why I think Yahoo will likely continue to advance significantly in the next few years, which should be reflected in its stock shares.
Again, I'm not sure now is the greatest time to buy Yahoo as I'm still leaning towards some sort of significant market correction. If Yahoo declines meaningfully in the near term, take the opportunity to get in.
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