Today’s 2014 Top Picks update has been under pressure due to economic and political factors, so our contributor has issued a “sell” recommendation.
Sell: Yandex (YNDX)
from Cabot Stock of the Month
My original selection of Yandex (YNDX) was based on the theory that investors’ perceptions of Russia would improve substantially this year, in part because of the Winter Olympics, and in part because I was optimistic that Russia’s protection of Edward Snowden would be received positively.
Additionally, I was optimistic that the growing use of mobile devices for search would continue to fuel the company’s growth. However, over the past two quarters, earnings have decelerated substantially, and today analysts are projecting earnings growth of just 15% this year, rising to 23% in 2015.
Additionally, there’s the situation in Ukraine, which has soured perceptions of Russia in many investors’ eyes. The slowdown in earnings, combined with the Ukrainian conflict, brought a wave of selling in the first four months of 2014 that was amplified by the market weakness of March-April. A rebound took the stock back up to its 200-day moving average at 36, but the stock rolled over there, which is a classic sign of a top in a downtrending stock. I recommend selling and moving to a healthier stock.
Timothy Lutts, Cabot Stock of the Month, www.cabot.net, 978-745-5532, July 9, 2014