Investors have good reason to love Marissa Mayer. Yahoo! (NASDAQ: YHOO ) stock is up 61% since she took over as CEO last July. The S&P 500 is up just 18% over the same period.
Mobile app gains are at least partly responsible. Mayer has been saying for months that her strategy is to beef up Yahoo!'s mobile presence. According to GigaOm, which reported on data compiled by Onavo, use of Yahoo!'s major mobile apps among iPhone owners increased in each of the past three months.
But investing is also a game best played in context. How does Yahoo! stock compare to peers Google (NASDAQ: GOOG ) and AOL (NYSE: AOL ) ? Here's what the numbers say:
| Current Share Price | $26.80 | $36.92 | $898.15 |
| Shares Outstanding | 1.08 billion | 77.5 million | 331.8 million |
| Market Cap | $28.7 billion | $2.84 billion | $294.0 billion |
| Trailing P/E Ratio | 7.76 | 3.15 | 26.87 |
| PEG Ratio | 1.38 | 1.57 | 1.27 |
| Gross Margin | 68.1% | 30.8% | 57.7% |
| Cash From Operations | (360.3 million) | $386.3 million | $16.56 billion |
Sources: S&P Capital IQ, Yahoo! Finance.
And here's what Fools say, going by the data available in our CAPS investor intelligence database:
| CAPS Stars (out of 5) | ** | * | **** |
| No. of CAPS Ratings | 5,116 | 305 | 18,139 |
| Bullish CAPS Ratings | 4,071 | 105 | 15,614 |
| Bearish CAPS Ratings | 1,045 | 200 | 2,525 |
| Bull Ratio | 79.6% | 34.4% | 86.1% |
Source: Motley Fool CAPS.
Yahoo! gets a low rating in CAPS, but that may be due more to its past than its potential. "Great management! A lot of great growth prospects and acquisitions should help drive future growth," writes CAPS investor storyboy34, in what appears to be a reference to Mayer
Google has its own mobile ambitions having recently changed terms for its AdWords search advertising program. The goal? Do a better job of monetizing mobile ads. The search king has also teamed with Yahoo! to bring contextual ads to Yahoo! sites for auto, finance, sports, and general news. Investing in both companies might prove an interesting way to play not only the growth of the Mobile Web but also the shift toward tailored, digitally delivered ads.
AOL, meanwhile, remains dependent on a growing network of cheap content via sites such as The Huffington Post. The company is also competing with YouTube by introducing unique web video shows. Call it one of several promising AOL projects, even if the company's comparatively low gross margin seems to have investors concerned.
Verdict: Yahoo! stock is a buy
As for Yahoo!, I think that mobile apps are catching on for a reason. The company has done good work to make them useful in iOS, which means more users who, in turn, may give the ad-supported full sites a second look. It's a virtuous cycle that I see growing over time, and I've rated the stock to outperform in my CAPS portfolio as a result.
Now it's your turn to weigh in. What do you think of Yahoo!'s mobile apps? Would you buy, sell, or short Yahoo! stock at current prices? Leave your comments in the box below.
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