An excellent operating margin, a superb return on equity, and the Verizon 6G Innovation Forum create an intriguing investment case. Should you call it a buy?
Long Trade Idea
Enter your long position between $42.88 (the lower band of its horizontal support zone) and $43.49 (the upper band of its horizontal support zone).
Market Index Analysis
- Verizon Communications (VZ) is a member of the Dow Jones Industrial Average, the S&P 100, and the S&P 500 index.
- All three indices grind higher in a melt-up of prices, but downside risks accumulate.
- The Bull Bear Power Indicator for the S&P 500 shows a negative divergence and does not confirm the uptrend.
Market Sentiment Analysis
Equity markets continued to grind higher yesterday following a weak start, once again powered by NVIDIA and other AI-related stocks. Investors pour capital into the AI sector without consideration, as one estimate calls for a $2.0 trillion funding requirement by the end of the decade, with estimated revenues at $1.2 trillion, creating an $800 billion shortfall. The bubble continues to expand, and markets will face their most significant test on Friday, with the release of the Federal Reserve’s favored inflation gauge. Bullish sentiment prevails, but investors should remain cautious.
Verizon Communications Fundamental Analysis
Verizon Communications is the largest mobile carrier in the US and the second-largest global telecommunications company based on revenue. It employs nearly 100,000 and serves over 146 million customers.
So, why am I bullish on VZ despite its one-month downtrend?
I like the wireless leadership at Verizon, which formed the country’s first 6G working group. The partnership with various sports teams is an excellent business move. VZ trades at low valuations, and price-to-book and PEG ratios confirm a misunderstood company. I also buy into the defensive nature of this telecommunication stock, as I believe we are in an AI-powered equity bubble. Finally, its dividend yield above 6.0% is excellent.
Metric | Value | Verdict |
P/E Ratio | 10.04 | Bullish |
P/B Ratio | 1.77 | Bullish |
PEG Ratio | 2.04 | Bullish |
Current Ratio | 0.64 | Bearish |
ROIC-WACC Ratio | Positive | Bullish |
Verizon Communications Fundamental Analysis Snapshot
The price-to-earning (P/E) ratio of 10.04 makes VZ an inexpensive stock. By comparison, the P/E ratio for the S&P 500 is 29.65.
The average analyst price target for VZ is $48.61. It suggests reasonable upside potential, with decreasing downside risks.
Verizon Communications Technical Analysis
Today’s VZ Signal
Verizon Communication Price Chart
- The VZ D1 chart shows price action inside its horizontal support zone.
- It also shows price action below its ascending Fibonacci Retracement Fan, but at solid support levels.
- The Bull Bear Power Indicator is bearish, but near its ascending support level.
- The average bullish trading volumes are higher than the average bearish trading volumes.
- VZ moved lower while the S&P 500 grinds higher, a bearish signal, but features breakout potential.
My Call on Verizon Communications
I am taking a long position in VZ between $42.88 and $43.49. Valuations are low, the PEG ratio confirms an undervalued stock, the price-to-book ratio provides a floor to future corrections, and the dividend yield is excellent. I am dialing up a long position in VZ.
- VZ Entry Level: Between $42.88 and $43.49
- VZ Take Profit: Between $48.61 and $50.07
- VZ Stop Loss: Between $40.69 and $41.68
- Risk/Reward Ratio: 2.62
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