Josh Brown recently said on an episode of Halftime Report “Close your eyes and buy Verizon.” I could not agree more.
I. The Social Aspect
Verizon is the nation’s largest and most comprehensive wireless mobile carrier. Their network has constantly performed in the top rankings for JD Power and Root Metrics. They are also poised to deliver big on 5G, and recently had the NAD BBB shutdown TMUS adds claiming to be a better 5G network. They also have exposure to home internet service and cable TV through their Fios division. Due to the pandemic work from home / school from home is going to become a staple in the American routine going forward. We are going to need more powerful devices on more powerful networks to complete simple tasks we used to do in person.
II. The Fundamentals
Right now Verizon is trading just under $59, with a historic ATH at $62 which it made on Dec 19′. Verizon is also the cheapest with a P/E of 12.85 any of the Major 3 wireless carrier, A&TT has a P/E of 18+ while TMUS is around 37+. The important thing and probably the most significant is the dividend Verizon pays which yields around 4% and has constantly been lauded by boomers and income investors. This dividend is going to be very important due to the Fed keeping interest rates near 0 for the next 5 years. Investors are going to flood into stable dividend companies in the hunt for yield, and right now Verizon is the cheapest with the best reputation.
III. The Technicals
Verizon is sitting at the 78% Fibb Retracement from its ATH back in Dec, if it breaks and holds above 59.50 it has a real shot at grinding to $62 over the next few weeks. I’d look to add between $56-59 and cut bait if we retrace below $55.
IV. The Trade
I am currently positioned in the Oct 16. $70 calls ($5 each) as I anticipate a move into the low-mid 60’s by the end of September. I might add some Jan $70 strikes depending on how low the stock goes and how they are priced to the Oct. The great thing about VZ is it is a low IV stock that generally doesn’t move much, however this gives us the ability to bet small but win big.
Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence or consult your financial professional before making any investment decision.