Featured stock of the month: #Verizon $VZ

Verizon (ticker: $VZ ) has been a great investment for me so far, I have owned it for about 2 years now. It is one of the value stocks which offers both a solid dividend (>4%) and capital appreciation.

It is considered a 5G play and its deal with $DIS related to Disney+ has helped it soar.

Verizon is a mega cap, with a market value of 240B $. It currently trades at 58.13$ and it was trading at about 48$ when I bought it. This means a 20+% capital appreciation which outperformed the SP500 by 15 percentage points over the same period. And then you have to add the dividend, which was about 5% at the start of my investment and is now 4.28%. American stocks typically pay dividends out on a quarterly basis which gives you the option of re-investing more frequently than, say, most European stocks which pay a dividend on a yearly basis.

In terms of valuation, the stock is actually quite pricey at the moment and the projected total return over the next 5 years, including dividend, is of 41%. There are plenty of better valued stocks out there which offer a greater growth potential (even >100%), like $AMZN and $TSLA, but you probably want to combine more aggressive plays with other less volatile investments in order to stabilise your portfolio. In 2008, when the market was down 38.5%, Verizon was “only” down 21%. So far in 2020 Verizon is down 7% compared to a 15% fall of the SP500.

The stock has had a steep recover from the late March lows and is now trading above the 5 and the 50 moving average, with the 200 moving average within grasp.

VZ TA

It reports earnings for Q1 of 2020 on Friday the 24th of April. Consensus estimates are EPS of $1.22 and revenue of $32.37B.

If you want to see all the positions of one of my portfolios, you are welcome to follow me on eToro here.

 

An example of an undervalued computer hard disk drive manufacturers stock

If you look at the valuation of Western Digital ($WDC) these days you will find that the stock is very undervalued. According to YahooFinance it has a PEG ratio (5 years) of 0.2 !

As regards technical performance, the stock has lagged behind lately and is currently trading below its 20, 50 and 100 days moving average:

Western Digital Technical Analysis Chart | WDC | US9581021055 | 4-Traders

Value investing requires patience: even though the stock is trading at a discount with regards to projected future earning, timing is of the essence and one would need to watch if the market recognizes the value of Western Digital before starting a position.