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TheStreet Open House

5 Rocket Stocks Ready for Blastoff

Yahoo!

Yahoo! ( YHOO) is getting a lot of attention this week, after news hit that the firm was planning on purchasing social networking site Tumblr for $1.1 billion. The acquisition is a high-profile chess move for Yahoo! CEO Marissa Mayer, who's been working to turn the ship around at the flailing tech firm.

>>3 Tech Stocks Spiking on Huge Volume

Yahoo! has had more cash than sense in recent years, sporting a hugely attractive balance sheet and a much less attractive business. While the benefits of the Tumblr acquisition have yet to be seen (it appears that Yahoo is paying a hefty premium to acquire the platform), there are still some good reasons to like the former search star.

For starters, Yahoo! still boasts a stellar balance sheet. While the $1.1 billion Tumblr deal will materially cut into Yahoo!'s cash position, the firm will still have more than a sixth of its market cap covered with net cash. If management can prioritize returning some of that value to shareholders over spending it, I think both parties would be better off.

Too many investors underrate Yahoo!'s business. While the firm has lost its crown to the likes of Google ( GOOG), it's still one of the most popular destinations on the internet. The millions of eyes that hit Yahoo!'s pages each and every day translate into dollars; until that changes, this firm remains a bargain-priced tech name at current levels.

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