Yandex vs. Alphabet: Which Stock is a Better Buy?    

NASDAQ: GOOGL | Alphabet Inc. -  News, Ratings, and Charts

GOOGL – Yandex (YNDX) is known as the “Google of Russia”. Given that international stocks could outperform in 2021, is it the better buy? Patrick Ryan states his case.

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Yandex (YNDX) and Alphabet (GOOGL) are two of the most popular publicly traded companies that make money from search engines, the internet, and machine learning.
Yandex is often described as the “Google of Russia”. Like Google, it has a wide moat due to the Russian language’s script which means that it requires a different technology to be used. Unlike Google, Yandex is also dominant in a variety of areas beyond search like social media and eCommerce.
Dig deep into each of these internet companies and you will find YNDX holds considerable appeal even though it doesn’t receive the same level of publicity as GOOGL. Without further ado, let’s delve into each of these companies to determine which is better for your portfolio.

The Case for YNDX

YNDX is an internet company that makes products and services, largely through machine learning. Though investors and web users in the United States might not be familiar with YNDX, the company is a leader in the European market. The average European is well aware of YNDX’s popular search engine that serves up enhanced search results promptly.

Though search and portal is YNDX’s primary business, the company has four additional segments. Search and portal comprise around 70% of YNDX’s aggregate revenue. YNDX’s other segments include media services, classifieds, ride-hailing/FoodTech/self-driving automobiles, Yandex. Health, personal services, and advertising services.

YNDX is currently priced around $40, only $2 and change below its 52-week high of $72.95. The stock’s 52-week low is $27.93. YNDX has a forward P/E ratio of 51.91, meaning there is an argument to be made that it is slightly overvalued. However, a forward P/E ratio above 50 is not uncommon for a tech stock such as YNDX.

The average analyst price target for YNDX is $68.53, meaning there is slightly more than 2% downside ahead, assuming the analysts’ predictions hold. Of the four analysts who have performed a deep dive into YNDX, two consider it a “Buy” and two recommend holding.

The Case for GOOGL

GOOGL is a leader in tech innovation, branching out from its initial search engine business to inbound marketing, cloud computing, autonomous vehicles and so much more. More than 90% of all online searches are performed on GOOGL’s search engine.

Though GOOGL has skyrocketed in recent years, the analysts insist there is still room for the stock to climb higher as they have set an average price target of $1,950.58 for the stock, meaning it has the potential to spike by an additional 13%. Of the 28 analysts who have studied GOOGL, 26 consider it a “Buy” and only two recommend holding.

Add in the fact that GOOGL has a relatively low forward P/E ratio of 27.88 and the stock looks even better at its current price of $1,725.77 per share. GOOGL is $120 away from its 52-week high of $1,843.83. The stock’s 52-week low is $1,008.87.

GOOGL executives are risk-takers willing to test new ideas such as the company’s fintech service that has the potential to rival PayPal and Square. Though the reduction in advertising revenue during the pandemic certainly limited GOOGL’s upside potential in 2020, advertising revenue should move back toward normal as a coronavirus vaccine is rolled out in the months ahead.

Consider the POWR Ratings

YNDX has exemplary POWR Ratings highlighted by “A” grades in the Buy & Hold Grade, Trade Grade, and Industry Rank components. YNDX is ranked 9th of 67 stocks in the Internet category.

GOOGL is also a POWR Ratings superstar with “A” grades in the Buy & Hold Grade, Trade Grade, and Industry Rank components. Furthermore, GOOGLE is ranked first of 67 stocks in the Internet category.

The Winner

YNDX certainly has the potential to move toward $100 in the year ahead yet it is important to note the company is a Russian tech business. YNDX might struggle simply because Russia has not successfully contained the coronavirus, meaning less money will be spent on internet ads.

Furthermore, now that Biden will become president, the United States’ stance toward Russia will change, making it that much more challenging for Russian companies such as YNDX to make money. It is also concerning that the ongoing pandemic will take a chunk out of YNDX’s ride-hailing and other auto-related revenue streams.

Alternatively, the only significant stumbling block ahead for GOOGL is a potential yet unlikely breakup spearheaded by a blue Congress and a newly-elected president who hasn’t shied away from criticizing shareholder capitalism and monopolies. GOOGL is clearly the better play.

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GOOGL shares were trading at $1,777.14 per share on Friday morning, up to $2.80 (+0.16%). Year-to-date, GOOGL has gained 1.40%, versus a 1.82% rise in the benchmark S&P 500 index during the same period.


About the Author: Patrick Ryan


Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...


More Resources for the Stocks in this Article

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