Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Are You Ready for Russia's Google?

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

It's time for Yandex (Nasdaq: YNDX  ) to shine.

Russia's leading search engine went public this morning, raising $1.3 billion by pricing its shares at $25. Odds are that you've never pointed your browser at, but it's the search engine one of the world's largest countries.

Yandex accounted for 64% of Russia's search traffic last year, commanding a slice in its home turf as thick as Google (Nasdaq: GOOG  ) in the United States and nearly that of Baidu (Nasdaq: BIDU  ) in China. Google and Baidu have been market-thumping stocks since going public in 2004 and 2005, respectively. Will Yandex follow suit?

The financials are promising, though the company's growth trajectory is closer to a mature Google than a Baidu speedster. The company's been profitable since 2003, but earnings did slip during the recessionary-smacked 2009. Revenue only mustered a 14% advance that year. Yandex bounced back nicely last year, with revenue soaring 43% to $439.7 million. Earnings of $134.3 million in 2010 resulted in juicy net margins of just over 30%.

Where does Yandex grow from here? There were 38.3 million unique visitors in March. Yandex also has operations in Ukraine, Kazakhstan, and Belarus, but it's unrealistic to expect material growth outside of Eastern Europe. The company's growth will largely rest on broadening Internet usage in Russia and advertisers' realization that new media leads are more valuable -- and measurable -- than old school platforms.

Social networking has been the dot-com flavor of the month. Between LinkedIn's (NYSE: LNKD  ) huge pop and the initial euphoria for China's Renren (NYSE: RENN  ) , investors have been chasing the barely profitable Web 2.0 darlings. Yandex reminds us that search still matters, and it's where profitability has been partying for years.

Yandex, Baidu, and Google have been posting healthy margins for ages as the regional leaders. How can you not make money as a well-trafficked search engine? It doesn't cost much to serve up small query result pages, and paid search finds advertisers bidding against one another for interested seekers.

If I had to choose between Yandex, LinkedIn, and Renren for my portfolio, I'd probably go with Yandex -- though seeing the promising Renren now falling into the pre-teens makes it an intriguing value as a busted IPO.

Yandex isn't cheap. It opened near $35 today, giving the stock a rich market cap of $11 billion. It's not as globally reliable as Google, which is the leading search engine in most counties outside of China, Russia, and Japan. It's also not growing as quickly as Baidu. However, buying into Yandex isn't a leap of faith. Web 2.0 websites come and go, but Google, Baidu, and Yandex have profitably dominated their regions for years.

Welcome to the show, Yandex.

Are you buying or passing on Yandex's IPO? Share your thoughts in the comment box below?

The Motley Fool owns shares of Google. Motley Fool newsletter services have recommended buying shares of Google and Baidu. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Longtime Fool contributor Rick Munarriz remembers when social networks were an offline endeavor. He does not own shares in any of the companies in this story. He is also a member of the Rule Breakers analytical team, seeking out the next great growth stock early in its defiance.

Read/Post Comments (0) | Recommend This Article (11)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1498939, ~/Articles/ArticleHandler.aspx, 10/27/2016 11:14:17 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 hour ago Sponsored by:
DOW 18,169.68 -29.65 -0.16%
S&P 500 2,133.04 -6.39 -0.30%
NASD 5,215.97 -34.29 -0.65%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/27/2016 4:00 PM
YNDX $19.92 Up +0.97 +5.12%
Yandex CAPS Rating: ****
BIDU $175.10 Up +2.28 +1.32%
Baidu CAPS Rating: *****
GOOGL $817.35 Down -4.75 -0.58%
Alphabet (A shares… CAPS Rating: *****
LNKD $188.63 Down -0.66 -0.35%
LinkedIn CAPS Rating: ***
RENN $2.08 Up +0.02 +0.97%
Renren CAPS Rating: *