Yahoo! Fans Don Rally Caps

"I would prefer to put new money in Yahoo! at $32 than Google at $420," says Mike Binger, a money manager at Thrivent Financial, which owns shares of Yahoo! and Google among its $65.4 billion in assets under management. "I think Yahoo! is a 25% EBITDA grower," he adds, referring to earnings before interest, taxes, depreciation and amortization.

The stock is even cheaper if investors consider the value of its stakes in Yahoo! Japan and Yahoo! China, according to S&P analyst Scott Kessler, who rates the shares buy. He estimates that those investments are worth $9 to $10 per share.

"The company is underappreciated by investors because of its presence in Asia," he says. "Yahoo! is really dominant in certain countries there. They are stronger in Asia than in any other continent in the world."

Another supposed advantage for Yahoo! is the time users spend on its many sites. Users stay on Yahoo! on average for 3 minutes 10 seconds, while Google searchers use the site for about one minute, according to Nielsen/NetRatings. That's a big advantage for Yahoo!, since the longer a user's online, the more ads he or she is apt to see.

"In the long run, that's hugely important," says Darren Chervitz of Jacob Asset Management, which owns Yahoo! and Google shares among its $115 million in assets. "If there is one critical thing that Google needs to do, it is to catch up with Yahoo! in terms of usage."

Yahoo! is the top Web site both in page views and unique visitors, though its growth rates are showing signs of slowing, according to an April 10 Merrill Lynch report. Merrill rates Yahoo! neutral.

"Yahoo! is well positioned to benefit from secular Internet advertising growth and shares seem poised for a small relief rally on valuation alone," Merrill analysts Justin Post and Lauren Rich Fine wrote. But the analysts say they remain "concerned" about Yahoo!'s loss in search market share, the growth in popularity of sites like MySpace.com and a slowdown in affiliate revenue growth.