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Stocks to Buy: Get the "Google of Russia" for a Bargain By Kyle Anderson

When looking for the best stocks to buy, many investors avoid companies and markets that are tangled in bad news. For many, it seems like common sense to avoid areas that keep generating negative headlines. But for shrewd investors, "bad news" can frequently generate very profitable stocks. The post Stocks to Buy: Get the "Google of Russia" for a Bargain appeared first on Money Morning - Only the News You Can Profit From .

When looking for the best stocks to buy, many investors avoid companies and markets that are tangled in bad news.

For many, it seems like common sense to avoid areas that keep generating negative headlines. But for shrewd investors, "bad news" can generate the biggest returns.

stocks to buy"Bad news can create some of the biggest profit plays that you're going to find," Money Morning's Executive Editor Bill Patalon said. "Most retail investors just about stampede their way out of 'bad-news' stocks. Those stocks get hammered down to ridiculously cheap levels."

When retail investors flee a bad-news market, most of the stocks tend to fall with the tide. That allows investors to purchase strong, profitable stocks at discounted prices.

Today, one of the most prevalent bad-news markets is Russia.

"All the news concerning Ukraine, the Crimea, and Vladimir Putin has investors just about trampling one another to get out of Russian stocks," Patalon said. "And that's a big mistake."

Especially when it comes to Russian tech stocks.

Roughly half of the 140 million citizens in "Russia proper" are now online. That's one of the highest percentages in the world.

There are two areas specifically in which Russia's tech industry is doing really well right now: telecommunications and e-commerce.

Taking these factors into account, we found a Russian tech stock to buy now that's offering massive upside potential. It's commonly referred to as the "Google of Russia."

We're talking about Yandex N.V. (Nasdaq: YNDX).

YANDEX NASDAQ: YNDX May 15 loading chart... Price: 29.84 | Ch: -0.11 (-0.4%)

Currently, Yandex is the world's fourth-largest search engine, and the company has a 60% market share in Russia. Google Inc. (Nasdaq: GOOG, GOOGL) is the second-largest search engine in Russia, but it lags far behind Yandex with just a 25% market share.

But Yandex isn't just a search engine. It operates a news site, e-mail service, e-commerce portal, auction-based advertising site, navigator service, and a slew of mobile products.

The stock is down nearly 31% in 2014, but has rebounded recently, up nearly 12% since April 25. And according to Money Morning's Defense & Tech Specialist Michael A. Robinson, the stock still has plenty of room to run...

Why Yandex (Nasdaq: YNDX) Is a Stock to Buy Now

In January, YNDX stock was trading over $45 per share and was up 103% from January 2013. From there, the stock experienced a major sell-off and dipped as low as $24 per share in April.

"When I look at this stock from a technical standpoint, it looks to me like it hit rock bottom - I mean, it crashed," Robinson said. "But you need to see what's happened since, because it happened fast. It looks like it hit bottom, closing at $24 on April 25. But since then, in every trading session but one, it's ended the day in the green... with a winning trading session. We're now almost back to where we started. And there's more to come, especially in the long run."

The company's recent financials are another bullish indicator. Yandex's operating margin is 31% and its return on equity (ROE) is 32%. In its last earnings report, YNDX posted a 47% earnings per share (EPS) increase year over year. In the last three years, Yandex has grown EPS by an average of 42%.

The company's revenue figures have impressed as well. In its last report, revenue grew to $1.21 billion from $947 million in the previous year.

But most importantly, the company continues to expand its offerings.

"I still believe that Yandex is the best end-to-end Internet/ecommerce play in the Russian space," Robinson said. "Search is up, mobile is up, it's adding lots of social networking capabilities... this is a far-reaching company that's generating generous margins on its business. There's not a lot of need to add a lot of users in order to grow the company. They just need to keep adding to their offerings, and to keep growing them. And I believe Yandex will do just that."

If investors are comfortable buying "bad-news" stocks, then Yandex is one of the strongest profit plays at the moment. Expect YNDX to continue gaining from its April lows.

Which Russian tech stocks do you think are the biggest profit generators right now? Join the conversation on Twitter @moneymorning using the #Yandex and $YNDX.

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The post Stocks to Buy: Get the "Google of Russia" for a Bargain appeared first on Money Morning - Only the News You Can Profit From.

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