Verizon Communications Inc.

Vz2006126

After a weak performance in 2005, Verizon (VZ) is a stock of interest for 2006.  Basically I see VZ as a nice GARP (growth at a reasonable price) stock with a 5% dividend yield and upside potential driven by new products and services and a re-evaluation by the market.  Growth: Benchmark-setting subscriber metrics (high growth, low churn, good ARPU).  Margins: 19% operating margins.  Valuation: 1.7 Revenue/EV and 12.2 forward P/E.  New products and services: fiber to home, content delivery, and bundled services.  Current income: 5% dividend yield.  Sentiment: Potential for perception/sentiment shift as people begin to see VZ in a new light.  See this link for yesterday’s earnings report.  Cheers!

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