The Next Google Stock? Maybe
Alphabet Inc (NASDAQ:GOOGL, NASDAQ:GOOG) stock is an investment we would all jump at the opportunity to buy if we had a time machine. Go back to August 2004 and pick up a few shares of Google stock. We would be sitting pretty with a gain of 1,500%.The problem is that time machines don’t exist, so this creates a bit of a conundrum. Besides, who would have ever thought that the search engine business would be so lucrative?
Since I cannot go back in time to buy GOOG stock, I must find another alternative investment within the same search engine space, with the potential for similar investment returns. The alternative I have found is Yandex NV (NASDAQ:YNDX) stock. Yandex operates as an Internet search engine company in Russia. They have captured over 50% of Russian Internet users and offer a range of services in Ukraine, Belarus, and Kazakhstan. Yandex stock can be best explained as the Google stock of Eurasia.
Yandex and Google are difficult to compare as apples to apples, but there are definitely similarities in their business models. Yandex is expanding its services outside of search engine technology to generate revenues, similar to Google stock’s endeavours. When it comes to valuation, Google stock has a market cap of $547.0 billion, and Yandex has a market cap of $7.0 billion. YNDX stock is tiny in comparison. Trading at a mere $22.87 per share vs. Google stocks at $805.00 per share, an argument for value and price appreciation is valid.
The drop in energy prices and sanctions stemming from the war in Crimea has depressed Russian capital markets. In the process, YNDX stock has underperformed compared to the competing GOOG stock. This event has presented investors with an opportunity.
The following chart of YNDX stock illustrates that the trend that pushed shares lower has come to an end.
Chart courtesy of StockCharts.com
On April 1, 2014, YNDX stock generated a “death cross.” A death cross is a bearish signal that is produced when a 50-day moving average crosses below a 200-day moving average. Traders use this signal to confirm that a bear market is on the horizon. It is wise to trade in the direction of this signal. This signal warned investors of a possible drop in share price. YNDX stock dropped 68% after this signal was generated to a low of $9.94 on August 24, 2016.
On April 11, 2016, that same signal executed a “golden cross.” A golden cross is the exact opposite of a death cross, and signals that a bull market is on the horizon. This is the first piece of evidence that is suggesting higher prices.
The second piece of good bullish news is that the downtrend that defined the bear market since 2014 has been broken to the upside. The downtrend line, highlighted in blue, is created connecting the peaks. A downtrend is defined by lower lows and confirmed by lower highs. It can easily be identified as the price moves from the upper left to the lower right.
A break of the downtrend signals a change of trend. Couple this signal with the golden cross, and we have two indicators confirming a bullish bias.
The following chart illustrates the bullish price action following the generation of the signals.
Chart courtesy of StockCharts.com
The YNDX stock chart above is a perfect example of bullish price action. Bullish price action contains impulse waves (highlighted in green) and consolidation waves (highlighted in blue). Each impulse wave that goes higher is accompanied by an increase in volume, and each consolidation wave is accompanied by a decrease in volume. The increase in volume as prices moves higher confirms the trend. This is a solid bull market, and higher prices are likely to continue.
Is Yandex the Next Google Stock? It’s Possible
Google stock has been fruitful for investors who had the foresight to get in when share prices were much cheaper. With shares trading over $800.00, and a market cap of half a billion, the potential upside has been diminished. Yandex stock offers investors a compelling opportunity to enter the same business landscape, but at a fraction of the price. The price charts support this premise, as higher prices can be expected. If you feel like you missed out on GOOG stock, give Yandex a look.