After more than 60% growth year-to-date at the current price of around $44 per share, we believe Yelp’s stock (NASDAQ
NDAQ
: YELP), an online site for discovering local businesses ranging from bars, restaurants, and cafes, to hairdressers, spas, and gas stations – is fairly priced. YELP stock has increased from around $27 to $44 YTD, compared to a 17% rise in the S&P index. The stock rise during this period can be attributed to better-than-expected fiscal first-half results in 2023. We continue to believe that the company stands to benefit from its shift from local businesses and restaurants to multi-location advertiser strength and an uptrend in cost-per-click rates.
Notably, YELP stock had a Sharpe Ratio of 0.3 since early 2017, which is lower than the figure of 0.6 for the S&P 500 Index over the same period. Compare this with the Sharpe of 1.2 for the Trefis Reinforced Value portfolio. Sharpe is a measure of return per unit of risk, and high-performance portfolios can provide the best of both worlds.
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