Verizon Communications Inc. (VZ) reported earnings before the opening bell on Tuesday, and despite beating earnings per share estimates, the stock slumped as revenue disappointed. Verizon is a component of the Dow Jones Industrial Average and has been a perennial member of the "Dogs of the Dow." This stock has a P/E ratio of 11.21 and a dividend yield of 4.52% according to Macrotrends, which makes it a stock to add to your portfolio on weakness.
Version stock closed Wednesday, Jan. 30, at $54.00, down 3.9% so far in 2019 and in correction territory at 12.3% below its 2018 high of $61.58 set on Nov. 20. Verizon Wireless is one of the top smartphone platforms in the country, and the capital expenses to upgrade to the 5G wireless network are adding up. Being first to upgrade will be a future competitive advantage.
Verizon owns the content and email platforms Yahoo and AOL, which is a worthy internet platform known as Oath. The stock should be a member of your portfolio on weakness to the "reversion to the mean" at $50.02 and to my quarterly value level at $48.80 and enjoy the 4.52% dividend yield.
While Verizon stock was sliding lower, the Dow Jones Industrial Average closed at 25,014.86 on Wednesday, up 7.2% year to date and 15.2% above its Dec. 26 low of 21,712.53. The Dow is 7.2% below its all-time of 26,951.81 set on Oct. 3.
The daily chart for Verizon
Verizon stock has been above a "golden cross" since July 26, when the 50-day simple moving average rose above the 200-day simple moving average to indicate that higher prices would follow. This bullish formation was in play as the stock traded to its 2018 high of $61.58 on Nov. 20. Note how the 200-day simple moving average $53.32 was a magnet over the past two days.
The 2018 close of $56.22 was the input to my proprietary analytics and resulted in the three horizontal lines on the chart. My quarterly value level is $48.80, with my semiannual and monthly risky levels at $55.97 and $58.92, respectively. Above the chart is my annual risky level at $62.95.
The weekly chart for Verizon
The weekly chart for Verizon is negative, with the stock below its five-week modified moving average at $56.25. The stock is above its 200-week simple moving average, or "reversion to the mean," at $50.02. The 12 x 3 x 3 weekly slow stochastic is projected to decline 45.40 this week, down from 49.24 on Jan. 25.
Trading Strategy: Buy Verizon shares on weakness to the 200-week simple moving average of $50.02 and to the quarterly value level at $48.80. Reduce holdings on strength to my semiannual, monthly and annual risky levels of $55.97, $58.92 and $62.95, respectively.
Disclosure: The author has no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.