NEW YORK (The Street) -- It has been a delightful voyage for those of us sailing on the good ship Vodafone (VOD).
I've accumulated shares since June and had the good fortune of being on board when VOD decided to dispose of its 45% interest in Verizon Wireless to its joint venture partner, Verizon Communications (VZ).
My timing is sometimes imperfect, as I noted in September's From A to V: Why I'm Buying More Apple and Vodafone. But with VOD's dividend and the rumors circulating back then that it might sell its Verizon Wireless holding, I figured my average buying price of less than $30 a share was a bargain. It was. As of Friday, VOD shares are down 2.3% for the year to date.
It won't be long now before Vodafone, whose shares closed Friday down 1.2% to $38.41, carries out its intentions to enrich its shareholders, in cash and in Verizon shares, in what Vodafone Chairman Gerard Kleisterlee calls a "Return of Value" of nearly $84 billion.
Kleisterlee wrote in December that the return of value to shareholders is "...equivalent to U.S. $17 per ADS at current prices." The exact amount of the vaue to be returned to shareholders depends on a number of varying factors described in detail in the circular distributed to all shareholders. If you're interested or directly affected you'd be well-served to visit the company's Investor Relations Web page.
The entire experience of buying and holding shares of VOD through this process has been both rewarding and attests to the fact that there are times to accumulate a concentrated position on a well-run company that either has a lot of cash, an enormous operating margin or holds a fortune in the shares of another great company.
Here's a one-year chart that speaks volumes on the benefits of owing a company like VOD before and after its announcement on selling its Verizon Wireless stake and returning lots of value to VOD's elated investors.
VOD data by YCharts
The share price of about $27.50 looked reasonable in June 2013. After VOD's stock hit its 52-week high as a result of the big announcements, it had rocketed by more than 43% in spite of a drop in VOD's quarterly group cash and equivalents as illustrated by the orange line above.
Where's the Opportunity Now?
It's too late for now when it comes to buying shares of Vodafone. It makes sense to wait until after the distribution scheme is carried out, including the share consolidation, before looking at VOD and its investment potential.
For now, the best upside potential may be with Verizon Communication, which will control all of Verizon Wireless. Verizon Wireless was the first national wireless provider in the United States to build and operate a large-scale 4G LTE network it claims is the most advanced wireless network technology available, with speeds up to 10 times faster than 3G.
Verizon Communications, as you might recall, sold $49 billion in various debt instruments to investors last September at historically low interest rates. That helped bolster its total cash, which will help it complete the VOD transaction and still be able to offer VZ shareholders a generous dividend payout.
Verizon was a big mover among Dow stocks on Friday, opening the day 0.6% higher before closing down 1.2% at $48.42, down 1.5% for the year to date.
The company will announce its financial results for the last quarter of 2013 on Jan. 21. In the quarter ending Sept. 30, the company reported a 40% year-over-year increase in earnings per share and trailing 12-month (TTM) operating cash flow of more than $35 billion.
VZ is the second-biggest American telecom by market cap ($139 billion compared to AT&T (T) at over $184 billion), but analysts give it a higher one-year estimated upside stock price potential of 11.33% compared to AT&T at roughly an 8.6% upside.
But have analysts factored in VZ owning all of Verizon Wireless in the year ahead? Perhaps only partially. Friday's announcement by AT&T of a new program to lure T-Mobile (TMUS) customers probably means Verizon Wireless will need to compete by matching it.
I'm anticipating some upgrades by analysts after VZ reports its quarterly revenue and EPS on Jan. 21. Analysts are only anticipating, on average, a 3.3% increase in sales and revenue growth for the last quarter of 2013, and that might allow for an upside surprise by the company.
To be safe, if you don't own any VZ yet, start accumulating shares below $49 before the earnings release and then buy the rest after the company reports and analysts have had the opportunity to adjust their forward expectations based on VZ's guidance.
Who knows, down the road Verizon may spin off its less-promising operations, or an activist investor may motivate the company to find innovative ways to please shareholders the way Vodafone did. Verizon Communications is a good example of another company worth your concentration.
At the time of publication the author had positions in VOD, VZ and T.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.