Today’s new Top Pick for 2014 is a $14 billion company that holds the leading market share in Internet search in Russia.
Yandex (YNDX)
from Cabot Stock of the Month
For my 2014 selection, I looked outside the U.S., because world markets lagged the U.S. in 2013, and I think the best are likely to beat it in 2014. And I settled on a Russian company because I think investors’ perceptions of Russia are likely to improve substantially in the coming year, which should give a nice boost to leading Russian stocks. Russia gave Edward Snowden protection while he spoke the truth, and the Winter Olympics will show Russia in a positive light.
Yandex (YNDX) is the Google of Russia, with 62% of the market for Internet search. The company has operations in several former Soviet republics, but gets 97% of its revenue from Russia itself. Russia has just 53% Internet penetration, but with the rapid development of mobile networks, that’s rising fast. In the third quarter, the number of searches on Yandex grew 26%, paid clicks expanded 50% (the price-per-click dropped 5%) and the firm repurchased 6.6 million shares in the quarter (about 2% of the total outstanding), as part of a 12 million-share buyback. As a result, revenues grew 35% to $315 million, and earnings grew 38%, to $0.29 per share.
YNDX began trading in mid-2011, but peaked at 42.01 on its first day, and for the past two months, the stock has been working to break out above that old resistance to hit new highs. When it does, the stock will be free to climb higher.
Timothy Lutts, Cabot Stock of the Month, www.cabot.net, 978-745-5532, December 24, 2013