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Why Verizon Is A Still Buy After Beating Earnings

Verizon
VZ
reported better-than-expected second-quarter earnings before the opening bell on Wednesday, July 21. Its quarterly earnings-per-share came in at $1.37 per share with revenue of $33,764 million. Expectations were $1.30 per share on revenue of $32,688 million. The primary driver of gains came from Version Wireless on favorable demand for 5G phones.

The stock traded as high as $56.85 but failed to hold its 50-day simple moving average at $56.71. Strength has been below its monthly and quarterly pivots at $57.17 and $58.22.

I like Verizon for these reasons: The stock has a favorable dividend yield of 4.61% and its p/e ratio is reasonable at 12.19%. Verizon should benefit from infrastructure spending that should involve implementing 5G technology in rural areas of the country. Verizon Wireless is seeing strong demand the 5G smartphones.

The Daily Chart for Verizon

The daily chart for Version shows a 52-week trading range, down from its December 2, 2020 high of $61.95 and its February 16, 2021 low of $53.83.  This was a decline of 13.1%.

Given this trading range, the movement of the 50-day and 200-day simple moving averages does not factor. Just trade the ranges and use the value levels, pivots and risky levels from my proprietary analytics. Monthly and quarterly pivots at $57.17 and $58.22 are the two horizontal lines on the chart that are upside pivots. My targets for the remainder of the year are above the chart. These are semiannual and annual risky levels at $62.30 and $64.19.

One thing I can say is that is a daily close above the 50-day simple moving average at 56.66 targets the 200-day simple moving average at $57.61.

The Weekly Chart for Verizon

The weekly chart for Verizon is negative with the stock below its five-week modified moving average at $56.47. However, the stock is above its 200-week simple moving average or reversion to the mean at $55.70. Note that the stock has been mostly above this key level since the week of July 16, 2018. The 12x3x3 weekly slow stochastic reading is declining at 19.99 making the stock oversold.

Verizon becomes too cheap to ignore if this reading declines below 10.00. Don’t forget the positive 4.61% dividend yield, which makes Verizon the fourth cheapest stock in the Dow Jones Industrial Average.

Trading Strategy: Buy weakness to the low end of the trading range at $53.83. Hold long positions until the semiannual and annual risky levels are tested at $62.30 and $64.19.

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