/Quick Point/ – Verizon: One more thing…

Sunday, December 5, 2010

I received a good comment on my article, “Verizon (Part 1) – Announcements Support Its Growth Status.” I am sharing the comment and my response because I added some additional information…

Note: This comment came at SeekingAlpha.com, a website that selects articles to post from investment websites like Investment Directions. The editors at Seeking Alpha occasionally make changes to an article’s title and did so for my Verizon (Part 1) article. The title at SeekingAlpha.com is “Verizon’s 4G Strategy Puts It Firmly on a Growth Trajectory.”

Here is the comment:

John,

I enjoy all your posts and common sense investing philosophies. But, I don’t see how VZ can become a growth stock.

Since the price of 4G will be same or less than 3G, where will the growth come from? Is it any different than Ford replacing the 2010 F-150 with a new model 2011 F-150?

Rick

Dec 05 11:35 AM

And here is my reply:

Rick,

I understand how odd it seems (and feels) to think of Verizon becoming a growth stock. However, the company, through design and happenstance, is at the heart of the next wireless evolution. To me, this is one of those rare instances when everything is coming together – and, as I wrote above, amazingly fast.

One area I didn’t discuss is Verizon’s lack of competition. Yes, each competitor has some desirable features, but none compares to Verizon’s potential full complement. Coverage and client satisfaction continue to rank highest. Now, with 4G and Apple’s broadening distribution plans, Verizon could remove Sprint/Nextel’s 4G edge and AT&T’s iPhone exclusivity.

To run a true growth company, leadership is key. I have become very impressed with Ivan Seidenberg and believe he is the one to guide Verizon into and through a new growth stage.

Regarding the comparison with Ford introducing a new model, the 4G network is much more than a higher number. It is just the thing to remove the wireless speed and clogging problems – and just in time for all the products that are coming. This is similar to the move from dial-up to DSL.

One more thing: the stock is acting appropriately so far. I discuss the price action in “Verizon (Part 2) – The Stock Price Picture Looks Good.”

Naturally, in stock investing, nothing is certain. That said, Verizon seems to be well positioned to morph from an income to a growth stock, potentially rewarding investors handsomely. Moreover, its current 6% yield is a good foundation to cushion the downside risk if things don’t pan out.

Thanks for the comment.

John Tobey

Dec 05 12:54 PM

A /Quick Point/ is an observation relevant to current investment trends and recent Investment Directions’ articles.

Tags: , , , ,

Leave a Reply

You must be logged in to post a comment.

Search

John Tobey on Seeking Alpha

Seeking Alpha Certified

December 2010
S M T W T F S
« Nov   Jan »
 1234
567891011
12131415161718
19202122232425
262728293031