Real-Time Market Insights
Hot Stock News for Options Traders

Brand Face-Off: Google Inc vs. Yahoo! Inc.

Evaluating GOOG and YHOO from technical and sentiment viewpoints

by 12/23/2013 12:17:16 PM
Stocks quoted in this article:

Google Inc (NASDAQ:GOOG) and Yahoo! Inc. (NASDAQ:YHOO) are both household names, largely due to their historical dominance in the search engine market. In fact, a recent comScore analysis found that the rivals -- joined by Microsoft Corporation's (NASDAQ:MSFT) upstart Bing service -- continue to be very popular among Internet users.

On the charts, as well, GOOG and YHOO are long-term powerhouses. The former is up more than 57% year-to-date to trade at $1,114.23 per share, after hitting a record high of $1,115.80 earlier today. What's more, Google has outperformed the broader S&P 500 Index (SPX) by nearly 5 percentage points during the previous 40 sessions.

Meanwhile, YHOO has more than doubled in value in 2013 to wink at $40.59, and earlier notched a multi-year high of $40.76. On a relative-strength basis, the stock has outpaced the SPX by north of 20 percentage points during the last 40 trading days, as well. In other words, despite GOOG's laudable performance on the charts, YHOO appears to have even more technical tenacity.

Daily Chart of GOOG since December 2012

Daily Chart of YHOO since December 2012

Nevertheless, sentiment toward Google continues to be more positive, comparatively speaking. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), GOOG has registered a 50-day put/call volume ratio of 0.81, which ranks in the 44th percentile of its annual range. In other words, traders have scooped up calls and puts at about the average pace in recent months, relative to the past year.

By contrast, Yahoo!'s 50-day ISE/CBOE/PHLX put/call volume ratio of 0.35 is higher than 83% of similar readings from the past 12 months. This means speculators have bought to open YHOO puts over calls at a faster-than-usual pace, despite the firm's technical strength. From a contrarian perspective, an unwinding of these bearish bets could fuel yet another leg in the shares' ongoing rally.

Meanwhile, outside of the options pits, GOOG is well loved, whereas YHOO has received a more or less even dose of positive and negative recommendations. Specifically, the brokerage bunch has assigned Larry Page's brainchild 22 "buy" or better ratings -- including 19 "strong buys" -- versus just six "holds." By contrast, YHOO can claim only 13 "buy" or better endorsements, compared to 12 tepid "holds." Again, this leaves more room for the latter to benefit from a round of well-deserved analyst upgrades.

All things considered, the winner in this battle of the brands is Yahoo! Inc. (NASDAQ:YHOO), thanks to its blend of eye-popping technicals and surprisingly skeptical sentiment indicators. While Google Inc (NASDAQ:GOOG) is a formidable opponent, its Sunnyvale, Calif.-based rival has more potential to climb higher -- from a contrarian perspective -- as the skeptics begin to capitulate and jump on YHOO's bandwagon.

Keywords:
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT

Partner Center

© 2014 Schaeffer's Investment Research, Inc. 5151 Pfeiffer Road, Suite 250, Cincinnati, Ohio 45242 Phone: (800) 448-2080 FAX: (513) 589-3810 Int'l Callers: (513) 589-3800 Email: service@sir-inc.com

All Rights Reserved. Unauthorized reproduction of any SIR publication is strictly prohibited.

Market Data provided by QuoteMedia.com | Data delayed 15-20 minutes unless otherwise indicated.