Verizon: It's hard to beat modest growth with safety

Posted Oct 19th 2009 5:20PM by Joseph Lazzaro
Filed under: Verizon Communications (VZ), Stocks to Buy

Verizon Communications' (NYSE: VZ) shares have pulled-back from a high above $32 registered earlier this year, but you can view this move lower as a way to establish or to add to a VZ position, which is I'm reiterating my Buy rating for the company, first recommended on February 12, 2009 at a price of $29.86.

Verizon, which boasts 6 million landline subscribers, is still viewed by institutional investors as more old economy than new economy -- this despite being the largest wireless carrier in the U.S. with about 88 million wireless subscribers. Further, VZ's FiOS broadband service continues to exceed expectations, and the company's recently raised dividend adds to the positive mix: not bad, for a 'stodgy' old company.

In sum, Verizon offers modest growth and ample safety -- an enviable pair, given current economic conditions. The First Call FY2009/FY2010 EPS estimates for VZ are $2.47 to $2.53.

Stock Analysis: Verizon is a low-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 50% position in VZ now; then buy another 25% in one month, if U.S. economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your VZ position before December 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.

Tags: cellphones, FIOS, verizon, wireless

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Reader Comments (Page 1 of 1)

10-19-2009 @ 6:42PM

kpinvest said...

VZ also boasts a very attractive %6.5 yield. Buy in now while it's not popular, especially if they are able to figure out all the red tape getting the iPhone onto the VZ network.

10-30-2009 @ 3:54PM

steff.francisco said...

i know verizon is such a big firm. im just not aware or familiar about its type of industry. all i know about it is that its an account for BPO industries here in the philippines.. I was just hoping, someone could enlighten me.. thanks..