Why Verizon Communications, Inc. Is Ready to Rebound

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Bank of America upgraded telecom gorilla Verizon Communications (NYSE: VZ  ) from hold to buy on Monday, suggesting that the shares are attractively priced at the moment.

So what: Along with the upgrade, analyst David Barden reiterated his price target of $55, representing about 16% worth of upside to Friday's close. While momentum traders might be turned off by Verizon's price weakness in recent months, Barden thinks that all the uncertainty surrounding its deal with Vodafone Group (NASDAQ: VOD  ) offers patient investors an enticing entry point.

Now what: According to B of A, Verizon's risk/reward trade-off is particularly attractive right now. "VZ now trades at a 5 year low relative P/E multiple of 0.86x vs. its 1.15x average," noted Barden. "Even referring back to pre-crisis trading '04 to '08, VZ trades at its average of 0.88x. VOD deal-related selling of VZ shares is likely in our view and could drive short-term downside, but looking at pre-crisis valuation lows, we see $43.50 as the downside limit." When you couple that favorable scenario analysis with Verizon's juicy 4%-plus dividend yield, it's tough to disagree with BofA's bullishness. 

More reliable income opportunities
One of the dirty secrets that few finance professionals will openly admit is the fact that dividend stocks as a group handily outperform their non-dividend-paying brethren. The reasons for this are too numerous to list here, but you can rest assured that it's true. However, knowing this is only half the battle. The other half is identifying which dividend stocks in particular are the best. With this in mind, our top analysts put together a free list of nine high-yielding stocks that should be in every income investor's portfolio. To learn the identity of these stocks instantly and for free, all you have to do is click here now.

Read/Post Comments (2) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 24, 2014, at 4:04 PM, Tankota wrote:


  • Report this Comment On February 25, 2014, at 1:47 AM, garifolle wrote:

    I wish you were right.

    But the market was not very impressed by the upgrade.

    Two things might make things hard for Verizon.

    The problem with Netflix, and the acquisition of WhatApp by Facebook.

    Todays declaration by Verizon had nothing to excite feverish "investors" who run after strong and quick shares appreciation.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2851622, ~/Articles/ArticleHandler.aspx, 9/4/2015 9:26:05 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Brian Pacampara

I take a look at big 10% moves, as well as stock-shaking analyst calls, on a daily basis for The Fool. While I don't believe in active trading, closely monitoring Mr. Market's mood swings can help identify long-term opportunities.

Today's Market

updated 10 minutes ago Sponsored by:
DOW 16,102.38 -272.38 -1.66%
S&P 500 1,921.22 -29.91 -1.53%
NASD 4,683.92 -49.58 -1.05%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/4/2015 3:59 PM
VOD $33.89 Down -0.53 -1.54%
Vodafone CAPS Rating: ****
VZ $44.82 Down -0.90 -1.97%
Verizon Communicat… CAPS Rating: ****