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TheStreet Open House

5 Rocket Stocks to Buy for Repeat Gains in 2014

Stocks in this article: GSCSXYHOOBKBEAM

Yahoo!

It's probably fair to call Yahoo! (YHOO) the most underrated tech company in Silicon Valley. Sure, the search engine got its lunch eaten by Google (GOOG) in the wake of the dot-com bubble, and it's suffered some very public dramas in recent years. But none of that changes the fact that Yahoo owns an immensely valuable collection of assets that can still be had for a lot cheaper than its earnings multiple may suggest.

>>5 Dogs of the Dow to Buy in 2014

Today, Yahoo! still owns some of the most heavily-trafficked Web sites on the Internet. The firm originated the ad-supported e-mail model, and by offering valuable sticky Web services, it still enjoys a base of more than 650 million users. While CEO Marissa Mayer hasn't turned the $40 billion ship around just yet, revitalizations take time -- especially when they're as overdue as Yahoo!'s is. But it's the firm's present-day fundamental performance that should get investors excited.

As I write, Yahoo! carries around 16% of its market capitalization in cold hard cash. And it generates margins in excess of 26% each quarter. In short, Yahoo has a lot of dry powder and it's able to generate a lot more. While management has been spending at a breakneck pace to acquire attractive new assets, the shopping spree should slow with ample shareholder value intact in 2014.

Bottom line: Yahoo! is a far more functional company than most investors give it credit for.

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