Telecommunications giant Verizon Communications Inc. (VZ) is a component of the Dow Jones Industrial Average. This stock is the cheapest among the 30 stocks in the average, with a P/E ratio of just 6.51 and a dividend yield of 5%, making it the leader of the 2018 "Dogs of the Dow." Verizon Wireless is one of the top smartphone platforms in the country. The company is set to report earnings before the open on April 24.
Verizon stock closed Friday at $47.90, down 9.5% year to date and in correction territory at 12.5% below its 2018 high of $54.77 set on Jan. 26. The stock set its 2018 low of $46.20 on March 23. The stock is underperforming the Dow 30, which is down 1% year to date and is 8.1% below its all-time high set on Jan. 26.
Analysts expect Verizon to post earnings per share of $1.11 when it reports first quarter results on Wednesday. Investors will have a watchful eye on the revenue line as Verizon missed estimates on this metric in the fourth quarter. One key will be revenues from wireless services, which rose in the third and fourth quarters. Verizon owns AOL and Yahoo, which could increase growth potential, as might the roll-out of 5G services. (See also: How Verizon Built a Customer Base of 150M.)
The daily chart for VerizonCourtesy of MetaStock Xenith
Verizon is below its 50-day and 200-day simple moving averages at $48.30 and $48.78, respectively, but weakness to $46.20 on March 23 lines up with my second quarter value level of $46.51. The stock has been below my semiannual pivot of $50.48 since Feb. 8. These two levels are shown as horizontal lines on the daily chart.
The weekly chart for VerizonCourtesy of MetaStock Xenith
The weekly chart for Verizon is negative but oversold, with the stock below its five-week modified moving average at $48.27. The stock is also below its 200-week simple moving average, or "reversion to the mean," at $49.07, which has been tested nearly each week since the week of Feb. 9. The 12x3x3 weekly slow stochastic reading ended last week at 16.97 and has been below the oversold threshold of 20.00 since the week of March 30.
Trading strategy: Buy weakness to my quarterly value level of $46.51 and reduce holdings on strength to my semiannual and monthly risky levels of $50.48 and $50.84, respectively. (For more, see: Verizon's Stock Breakout May Lead to 12% Gain.)