I’ll be honest. I don’t really like recommending a stock like Verizon. That’s because I greatly prefer the excitement of buying underfollowed growth and value stocks that have a strong chance to outperform the market.
Verizon is the antithesis of those kinds of adrenaline pumping stocks. But Verizon is also EXACTLY the kind of stock that we need to own at this time while the market is in Flight to Quality mode. That’s why I recently added it to the Reitmeister Total Return portfolio where it has gained over 2% while the market has fallen by about the same amount.
As one of the largest publicly traded companies at $238 billion market cap, it’s not a shocker that growth is on the tepid side. That also goes hand in hand with being a mature telecommunications company. So the best way to appreciate their growth picture is explore their earnings report history.
Not only have they gone 6 straight quarters with an earnings beat, but each time they have seen analysts increase estimates going forward. That is a mark of a company experiencing earnings momentum that generally leads to a higher share price. Just as important there is virtually no earnings impact to come directly from the US China trade dispute. Owning more stocks that are outside that fray is certainly in our best interest at this time.
Right now the average target price from Wall Street analysts stands at $61.67. That is a solid 10% above current levels, which is actually one of the better values these days for a defensive, large cap growth and income stock.
Even better is the value view of these shares by the 5 Star analyst from Goldman Sachs. Brett Feldman is not shy to covet these shares with a street high $65 target. Given that Verizon stood over $60 a year ago…and earnings estimates are now higher…I believe $65 is a quite reasonable destination for Verizon Communications Inc. (VZ - Get Rating) shares over the next year.
The low bond rate environment begs investors to seek income elsewhere. Stable stocks like Verizon Communications Inc. (VZ - Get Rating) are a great choice given the current 4.3% dividend yield + history of increasing dividends + current beat and raise earnings momentum that should make it easy to raise dividends again and again.
As noted in the intro, these shares have rallied 2% this month while the market sank lower. So it is scoring well in the category of “What have you done for me lately?”.
This positive momentum is also showing up in the POWR Ratings score of B (Buy). Even more attractive is the A rating for Industry Rank. Meaning that the telecom group has been a clear outperformer this year especially since May as we have experienced wave after wave of Risk Off selling that has driven more investors to the comfort and safety of these shares.
Putting It Altogether
Verizon actually scores well across all these important factors. But the simplified version of this investment goes as follows…
This is a safe stock that has about 10-15% upside on price + 4.3% dividend yield = a smoother path to outperformance during these volatile times.
What to Do Next?
To dig in deeper on the attractiveness of Verizon, especially the 4 different components of their POWR Ratings then click here: https://stocknews.com/stock/VZ
And to see the other 8 stocks & 2 inverse ETFs that I currently am recommending to investors, then check out the Reitmeister Total Return portfolio.
Verizon Communications Inc. (VZ - Get Rating) shares closed at $55.92 on Friday, down $-0.86 (-1.51%). Year-to-date, Verizon Communications Inc. (VZ - Get Rating) has gained 2.61%, versus a 15.04% rise in the benchmark S&P 500 index during the same period.
About the Author: Steve Reitmeister
Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks. More...
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