| Stock (Symbol) | Stock Price | |
YY (YY) |
$51 |
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| Data is as of | Expected to Report | Sector |
December 4, 2013 |
Technology |
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| Sharek’s Take | ||
 YY has amazing potential and upside. YY is a musical and video game social network in China, where users can cast votes and interact with singers. YY.com primarily derives its revenue from online games (40% of sales), YY Music (40%), advertising (10%) and YY’s membership program (10%). This could be the next YouTube or the next MySpace. The stock’s gone from $15 to $50 and carries risk. The first risk is if the stock market takes a break in January then these high-beta names will probably correct, and my calculations show the stock could fall to $33. The upside? I think YY has a fair value of $95 in 2014. But let’s refocus on the risk. YY is a Chinese company and I don’t trust the books. Who knows how many real users YY has? I’m cautious on Chinese Internet stocks going into 2014. I’ve made money on these and have taken profits. If they break out I will probably invest more at that time. |
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| One-Year Chart | ||
 Perfect looking chart, except the stock’s more than tripled. Love the P/E of only 24 and the high estimated long-term growth rate of 46%. Quarterly profit growth along the bottom is amazing. |
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| Earnings Table | ||
 Last quarter profit growth was 161% and revenue grew 113%. YY Music revenue grew 160%, online game sales 84%. Operating expenses increased only 58%.YY crushed earnings estimates for the second straight quarter. Next quarters estimate also just got a big bump. Annual Profit Estimates jumped big time. Especially this year’s estimate, which has only one-quarter left. I’m surprised this stock isn’t plowing higher. Quarterly estimates continue to look splendid. We should see a continuation of triple-digit profit growth for at least the first half of next year. |
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| Fair Value | ||
 This stock is very reasonable at 24 times earnings. I feel the Chinese Internet stocks are doing what the U.S. ones did in 1997-1998. There’s real profits backing these moves (as far as I know). It’s reasonable YY could double next year. |
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| Ten-Year Chart | ||
 This stock is on a parabolic move. But the profits are backing it and at least the stock’s building a little base right now. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
9 of 26 |
YY has amazing potential and I feel will be one of the biggest winners of 2014. Still we must proceed with caution. I will keep a close eye on this stock and likely buy more if or when it breaks out. |
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Aggressive Growth Portfolio
8 of 13 |
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