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Verizon: Cash Is King

May 28, 2020

Summary:

*Verizon's stock has disappointed so far in 2020, as it has underperformed the broader market by a wide margin.

*The company recently reported mixed Q1 2020 results, but I believe that Verizon is well-positioned to weather the current COVID-19 related storm.

*We are long Verizon, and we plan to add at current levels.

 

Verizon's ($VZ) stock performance has been subpar over the last few years, and it has pretty much been the same story so far in 2020. On a YTD basis, VZ shares have underperformed the S&P 500 (SPY) by approximately 3 percentage points.

 

Poor investor sentiment for the communications sector (and I should note for good reason) has wreaked serious havoc on Verizon's stock price, but I believe that this company is worthy of investment dollars at today's price.

The company's Q1 2020 operating results were not great by any means, but, in my opinion, investors should feel better knowing that the company is properly positioned from a cash flow perspective to easily weather the COVID-19 related uncertainty. Moreover, when compared to its closest competitor, AT&T ($T), Verizon's cash flow metrics are something to write home about.

 

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