Its easy to question stock prices based on multiples of future earnings. The arguments have been applied to CSCO, GLW, now YHOO and zillion other companies. Right, if YHOO makes 50 cents, which is a big number, the a p/e of 30 would give you 15, p/e of 40 would give you 20 dollars a share.
BUT - the market has always been a forward looking mechanism, and give significant credit, or disdain to the total value of a company - not just earnings. Granted, Graham and Dodd, and their son Buffett would beat you to death with their focus on "true value".
In the 90s, the market got just a wee bit crazy with its valuations, having to invent new measures, such as price to sales to justify soaring internet prices.
YHOO, along with EBAY and AMZN are premier companies in the Internet world. They will be giants, far beyond what they are today. I personally find YHOO at 20 today both cheap and ahead of itself. I hold YHOO for the long term and feel a price of 50-60 or better is likely in the next few years.
Sorry, KT, i will not provide you with either a buy or sell signal on YHOO. However, if you were to interview my faithful pup, he could enlighten you to mood changes of euphoria to disgust based on interim movements. larry |
