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Trade-Ideas: Yahoo (YHOO) Is Today's Momo Momentum Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Yahoo ( YHOO) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified Yahoo as such a stock due to the following factors:

  • YHOO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $466.0 million.
  • YHOO has a PE ratio of 31.3.
  • YHOO is currently in the upper 30% of its 1-year range.
  • YHOO is in the upper 25% of its 20-day range.
  • YHOO is in the upper 35% of its 5-day range.
  • YHOO is currently trading above yesterday's high.
  • YHOO has experienced a gap between today's open and yesterday's close of 0.8%.

'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in YHOO with the Ticky from Trade-Ideas. See the FREE profile for YHOO NOW at Trade-Ideas

More details on YHOO:

Yahoo! Inc. operates as a technology company worldwide. YHOO has a PE ratio of 31.3. Currently there are 14 analysts that rate Yahoo a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Yahoo has been 18.2 million shares per day over the past 30 days. Yahoo has a market cap of $36.2 billion and is part of the technology sector and internet industry. The stock has a beta of 0.90 and a short float of 2.8% with 2.53 days to cover. Shares are down 9.8% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Yahoo as a buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, solid stock price performance, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • Although YHOO's debt-to-equity ratio of 0.09 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 2.99, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has slightly increased to $357.41 million or 8.03% when compared to the same quarter last year. Despite an increase in cash flow, YAHOO INC's average is still marginally south of the industry average growth rate of 17.67%.
  • Compared to its closing price of one year ago, YHOO's share price has jumped by 29.62%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • The gross profit margin for YAHOO INC is currently very high, coming in at 83.10%. Regardless of YHOO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, YHOO's net profit margin of 24.87% compares favorably to the industry average.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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