01/10/2014 5:00 am EST


Timothy Lutts

Publisher, Cabot Heritage Corporation


For my 2014 selection, I looked outside the US, because world markets lagged the US in 2013, and I think the best are likely to beat it in 2014, explains Timothy Lutts, editor of Cabot Stock of the Month.

And I settled on a Russian company, because I think investors' perceptions of Russia are likely to improve substantially in the coming year, which should give a nice boost to leading Russian stocks. I expect the Winter Olympics will show Russia in a positive light.

Meanwhile, Yandex (YNDX) is the Google of Russia, with 62% of the market for Internet search. The company has operations in several former Soviet republics, but gets 97% of its revenue from Russia itself.

Russia has just 53% Internet penetration, but with the rapid development of mobile networks, that's rising fast.

In the third quarter, the number of searches on Yandex grew 26%, paid clicks expanded 50% (the price-per-click dropped 5%), and the firm repurchased 6.6 million shares in the quarter (about 2% of the total outstanding), as part of a 12 million-share buyback.

As a result, revenues grew 35% to $315 million, and earnings grew 38%, to $0.29 per share.

YNDX began trading in mid-2011, but peaked at $42.01 on its first day, and for the past two months, the stock has been working to breakout above that old resistance to hit new highs. When it does, the stock will be free to climb higher.

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