Are Verizon Shares Trading at a Discount?

Verizon Communication(NYSE:VZ) has taken a big hit since the U.S. presidential elections, dropping about $2 or roughly 5%. With a dividend yield of a healthy 5%, an enviable position in a growing market with only one major competitor, and the largest subscriber base in the mobile market, is VZ right now a BUY, a WAIT and SEE, or a STAY AWAY?

Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

Spectrum availability, or the lack of it, is the big challenge for giants Verizon and AT&T. Verizon’s recently approved acquisition of Advanced Wireless Spectrum from a group of cable companies gives them a near-term advantage over T, whose acquisition of T-Mobile was denied. However, AT&T is expected to outdistance VZ’s spectrum capability once they complete the current regulatory hurdles they face.  The mobile market is increasingly looking for faster communication and Verizon has a time sensitive advantage here as well. The company’s 4G LTE is expected to roll out in mid-2013, more than a year sooner than AT&T’s planned rollout in 2014.

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H = High Quality Product Pipeline

For the mobile carriers product pipeline is about devices and subscription plans. Verizon now has the coveted iPhone in its lineup and the company has at least 5 new phones in its pipeline. Verizon and its competitors are rolling out innovate data plans as the move to smartphones with better capability means more data use from customers.