Stock (Symbol) |
YY (YY) |
Stock Price |
$89 |
Sector |
| Technology |
Data is as of |
| October 10, 2017 |
Expected to Report |
| Nov 20 |
Company Description |
 YY Inc. (YY) is a social platform that engages users in real-time online group activities through voice, video and text on personal computers and mobile devices. The Company’s segments include YY IVAS and others, Huya broadcasting, and 100 Education. YY enables users to create and organize groups of varying sizes to discover and participate in a range of online activities, including music shows, online games, dating shows, live game broadcasting and e-learning. YY offers users an entertainment experience through its social community. It owns the domain names of YY.com, Duowan.com, 100.com, Huya.com, Edu24ol.com and Zhiniu8.com. Source: Thomson Financial |
Sharek’s Take |
 YY (YY) is a social network in China that provides users with online games, online music, and live game broadcasting. It’s kind of like a Chinese MySpace in a way. The company makes revenue from advertising, online games, online dating, music (including live broadcasts) and membership programs. Most of the content is user generated, and singers (both famous and karaoke wannabes) often post videos of themselves sitting at their computers singing a song. I owned YY from 2013 to 2015 and sold it when it no longer fit the mold (estimates were declining, growth was slowing). Now YY is back in a big way, and whipping up on analyst profit estimates. Here’s company profits the last 4 qtrs, along with the amount YY beat by:
These results have pushed the stock higher, but it still has huge upside to its Fair Value because it hadn’t moved in a while. In fact I took it off my radar, and only started covering again after the stock broke out on high volume and got my attention. Now the stock has a P/E of only 15 yet an Estimated Long-Term Growth Rate of 27% a year — and profits are growing around 50% right now. YY is $89 yet my 2017 Fair Value is $123 and 2018’s is $145. And that’s only assuming a P/E of 20. But buyer beware, this stock didn;t get a high P/E in the past, and the company did go through a rough patch a couple years ago so certainty and consistency aren’t as good as its growth opportunity. For now we ride the wave, but if times get tough and I need to cut stocks out of my portfolio I would probably cut YY before some of the more established Chinese companies. |
One Year Chart |
 This stock’s on a nice uptrend, and with that P/E of 15 the stock’s got room to run. Profit growth has been great the last 4 qtrs and if the company continues to beat that could continue. Also, estimates have been on the rise. 2017’s just jumped from $5.32 to $6.13 and 2018’s from $6.10 to $7.27 — those are excellent increases! Qtrly Estimates call for 43%, 16%, -2% and 12% profit growth the next 4 qtrs but these also just increased and if YY keeps beating they could mirror what growth has been the last 4 qtrs. Nice Est. LTG of 27% a year. If you don’t own YY now I would look for a pullback or a basing pattern before making a big investment. |
Fair Value |
 Last qtr my Fair Value was17x earnings. I put it low because the P/E was 12 and I was already assuming huge upside. And the stock did deliver as expected — as it shot from $64 to $89 — 39%. Now I’m taking my Fair Value up to 20x earnings but that still may be too low. I do want to remind you I’ve followed this company for years and it didn’t garner a high valuation before. |
Bottom Line |
 Here’s the ten-year chart of the stock. Quick rise up then years of downtrend. Right now things are going great, but the recent move has made the stock go parabolic, which means a little pullback could easily snowball into a big one. But for now everything is rosey. YY ranks 9th in the Aggressive Growth Portfolio and Growth Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
9 of 35Aggressive Growth Portfolio 9 of 14Conservative Stock Portfolio N/A |
