Verizon Is Now a Must-Own Stock
You would have to go back 16 years to find the last time Verizon (VZ) - Get Report shares traded at their current levels of $56 per share. But you would need to go back six months to have made almost 30%, if you bought the stock at $44 based on my buy recommendation.
Verizon is set to report second-quarter earnings results before the opening bell on Tuesday. Despite the strong run Verizon shares have enjoyed, the company has many more catalysts to send the stock higher.
Among those catalysts are its acquisition of Yahoo!'s (YHOO) core assets. That could put Verizon on par with the likes of Action Alerts PLUS holdings Facebook (FB) - Get Report and Alphabet's (GOOGL) - Get Report Google in terms of video and digital advertising.
What do the charts say? Take a look at chart below, courtesy of TradingView.
Verizon shares closed Friday at $56.10, up 1.32%. Based on Friday's closing price, the stock surged as much as 48% since its 52-week low of $38.06. With its 21% rise year to date, Verizon has not only bested the 6% rise in the S&P 500 (SPX) index, it has outperformed all but two stocks in the Dow Jones Industrial Average (DJI) .
In premarket trading, Verizon was rising by 0.4%.
The stock, which is firmly above both the 50-day and 100-day moving averages, is on a bullish trajectory. That suggests that not only could the stock breach resistance above $56. It could take out its all-time high of $61, reached in September 1999. That would make for 10% additional gains by year's end.
The stock trades at just 14 times fiscal 2016 estimates of $3.88 in earnings per share, compared to a price-to-earnings ratio of 17 for the average stock in the S&P 500 index. If the stock were priced on par with the rest of the S&P 500, it would trade at $65 per share, or 16% higher. Verizon's P/E drops one point, based on fiscal 2017 estimates of $4.02 pert share.
Add in the company's solid annual dividend yield of 4.03%, which is twice that of the average stock in the S&P 500 index, and Verizon belongs in any portfolio.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.