About a week ago, I recommended buying Verizon Communications (NYSE:VZ) at 31.50. I now believe that 32.50 is a good target buy price, although it may take a while before the price will drop to this level. I do not think buying Verizon right now is a good call; it's price is just too high. Verizon is a great company, and the dividend is hard to turn down. But with an EPS of 16-18 cents, there aren't any numbers to support its current price. Sure, they had lots of expenses in the last couple of years, such as working on their Fios installments, and these investments are predicted to pay off multiple fold in the long run. But as of now, the price for Verizon is too high; investors of Verizon are too speculative.
However, there is another telecommunications company that I believe is a much better bet: Vodafone Group Plc (NASDAQ:VOD). This company is very similar to Verizon; in fact, it is a part of a join venture with Verizon Wireless. Vodafone has about a 45% stake in this joint venture. It is also involved in several other joint ventures. Another similarity important to note: BOTH have great dividends. Verizon's annual yield is about 5.43% while Vodafone's annual yield is about 4.9%. For more information of Vodafone from Reuters, click here. Why do I favor Vodafone over Verizon? Besides Vodafone's handsome dividend, which is less than Verizon's, Vodafone has been cutting down their expenses, whilst maintaining their revenue, increasing their cash flow substantially. Additionally, they have an amazing profit margin of 33%. Furthermore, Vodafone is working in promising markets. For example, Vodafone is the second largest telecommunications company in India, a nation with a high population and a rapid growth in technological advancement.
Vodafone has numbers to show, unlike Verizon. With a P/E ratio less than 8.5, Vodafone is a great long-term stock. You can buy now and still get a great stock. I'm waiting for the price to hit $26-27. Hit that Bull's Eye!
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