Choose Verizon (VZ), if you're just as cautious as its subscribers

Yes, landlines are passé. Definitely not hip. Nor the stuff of dinner party talk. Cell phones and mobile technology are totally cool and all the rage. That is, until there's a power failure in your area. Then one sees the value of a landline phone (and a phone handset that works without a 110-volt electric outlet, by the way). Verizon (NYSE: VZ) has 36 million landline subscribers and is the major phone service provider in New York City, most of whose 8 million residents would sooner move to the South Pole before they would concentrate their communications services in one technology.

Look for a decent 7-9% revenue gain for VZ in F2009, to about $110 billion, including an approximately $10 billion gain from the buy of Alltel in January 2009.

Further, wireless revenue should increase nicely, climbing about 10% in F2009, ahead of its peers. The roll-out of Verizon's FiOS television business has been mediocre, but the broadband Internet component of that business is impressive, with 25% of VZ's 10 million FiOS-capable homes / businesses choosing the service. The First Call F2009 / F2010 EPS estimates for VZ are $2.51 / $2.67.

Stock Analysis: Verizon a low-risk stock. Verizon is an investment, not a trade. Consider buying a 25% position in VZ now; then buy another 25% in three months, if U.S. economic conditions don't worsen substantially. More-cautious investors should wait until Verizon clears and closes above $31 before buying shares. Under any circumstance, don't buy more than 50% of your VZ position in the first half of 2009. Sell / Stop Loss if you were to buy shares in this company: $18.


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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.