Verizon Stock: An Unmissable Bargain Ahead of Earnings
Verizon is set to announce earnings before Tuesday’s market open, boasting a remarkably low P/E ratio of 6.63 and leading the 'Dogs of the Dow' with a 4.78% dividend yield, making it an attractive buy.
Verizon Communications Inc. (VZ), a major player in the telecommunications sector, is also a key component of the Dow Jones Industrial Average. With a P/E ratio of just 6.63, it stands as the most affordable stock among the 30 Dow components, paired with an impressive 4.78% dividend yield. This combination crowns Verizon as the top 'Dog of the Dow' for 2018. Verizon Wireless remains one of the nation's leading smartphone platforms, reinforcing its strong market position.
Last week, Verizon’s stock closed at $50.62, marking a 4.4% decline year-to-date and trading 7.6% below its 2018 peak of $54.77 reached on January 25. The stock’s 2018 low was $46.20 on March 23, and it currently trades nearly 10% above that level. Despite this, Verizon has underperformed relative to the Dow 30 index, which has gained 1.3% year-to-date and sits 5.9% below its all-time high of 26,616.71 set on January 26.
Analysts forecast Verizon will report earnings per share of $1.14 for the second quarter, with results expected before the market opens on July 24. Investors should focus not only on earnings but also on guidance concerning new payment plans, which could impact future revenue streams. Additionally, the recent tax law changes may complicate financial outcomes. Attention should also be given to Oath, Verizon’s combined digital media platform formed from AOL and Yahoo assets. (See also: Verizon’s Undervalued Stock Poised for a 10% Upside.)
Examining Verizon’s daily chart reveals that the stock is trading above its 50-day and 200-day simple moving averages, positioned at $49.31 and $49.39 respectively. On Monday, Verizon held its semiannual pivot at $50.41, with a monthly resistance level at $52.37 and a quarterly support level at $44.08. The annual resistance stands higher at $62.49.
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The weekly chart for Verizon shows a positive trend, with the stock slightly below its five-week modified moving average of $50.19 but comfortably above its 200-week simple moving average of $49.06. This level, often considered a 'reversion to the mean,' has been tested almost weekly since early February. The weekly slow stochastic indicator climbed to 75.56 last week, up from 68.73 on July 13, signaling growing momentum.
My personal trading strategy involves purchasing Verizon shares during dips toward the 200-day simple moving average near $49.39, while trimming positions when the stock approaches monthly and annual resistance levels of $52.37 and $62.49, respectively. The semiannual pivot at $50.41 acts as a key magnet for price action. (For further insights, see: Goldman Sachs Highlights Unfair Treatment of Verizon and Charter.)
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