U.S. investors are always in search of "the next
Google (Nasdaq: GOOG)," hoping to latch on to a stock that can appreciate smartly over many years.
In China, they've already had their Google moment. The country's leading search engine provider, Baidu.com (Nasdaq: BIDU) has seen its shares rise from the low teens in early 2009 to a recent $133, valuing the company at more than $45 billion.
Now, investors are starting to pay closer attention to Yandex.com (Nasdaq: YNDX), Russia's leading search engine. Fears of falling market share have pushed its stock down more than 40% since a post-IPO spike last spring, but those fears increasingly appear misplaced. And the company's $7 billion market value, though not inconsiderable, still appears to sharply discount the prospects of major growth in the years ahead.
Accelerating growth
While Baidu and Google saw explosive growth right out of the gate, Yandex needed time to gain traction, finally reaching an inflection point in the last few years. Sales grew a modest 14% in 2009 to $295 million, but rose 43% in 2010, 60% in 2011, and should rise another 40% in 2012 and 2013, translating into $1.3 billion in sales. Goldman Sachs sees that figure hitting $1.7 billion by 2014. (Note: If you look these numbers up on your own, the current consensus forecasts on Yahoo Finance are far off the mark, as far as I can tell.)
So why is Yandex's growth finally accelerating? Because major Russian companies are belatedly embracing the Internet as a key part of their marketing campaigns. Goldman Sachs sees Russian online ad spending rising 35% in 2012 and 30% in each of the following three years.
Make no mistake, Google is a formidable player, even in Russia. The company's Android smartphones are becoming increasingly popular and are helping take market share.