6. Verizon Communications Inc. (NYSE:VZ)
Number of Hedge Fund Holders: 67
Analysts Upside Potential: 12.70%
Verizon Communications Inc. (NYSE:VZ) is a major telecommunications holding company that provides a wide array of communication, information, and entertainment services to consumers, businesses, and government entities. Its operations are divided into two primary segments: Verizon Consumer Group and Verizon Business Group.
While the Verizon Consumer Group segment engages in providing wireless and wireline services in the United States, the Verizon Business Group is designed to cater to business and government needs. Within this segment, the company provides tailored wireless and wireline services, data services, video conferencing services, and Internet of Things solutions.
The company ranks as the 6th best video conferencing stock to buy according to analysts. The video conferencing services offered by Verizon Communications Inc. (NYSE:VZ) include WITS 3 Video Conferencing, which is an interactive image and voice communication service supporting both pre-scheduled and on-demand conferences. It features 24/7 technical support and flexible reservation options for users.
The company also has a longstanding 29-year partnership with Cisco Webex Meetings, a cloud-based platform that integrates video and voice conferencing with messaging and file-sharing capabilities. This service is optimized for mobile devices, enabling users to connect from virtually anywhere.
The company released its third-quarter results for fiscal 2024 on October 22nd. The company delivered growth within its wireless service revenue and adjusted EBITDA growth. The wireless services revenue for the quarter was up 2.7% year-over-year and the adjusted EBITDA of $12.5 billion was the highest ever reported by the company.
However, its total revenue of $33.3 billion remained flat year-over-year, mainly due to tough market conditions characterized by high inflation. However, the prospects of growth for the company remain bright. Management projects that its wireless service business will also expand at a rate of around 3% this year. It is expected to be boosted further by the pending acquisition of Frontier Communications for $20 billion, which would expand its fiber network.
Lastly, its dividend yield of 6.6% remains one of the key points of attraction for investors. In September Verizon Communications Inc. (NYSE:VZ) increased its dividend by 1.9% marking the 18th straight year of dividend increase. Over the past decade, the company has increased its dividends by around 23%.
Third Point Management stated the following regarding Verizon Communications Inc. (NYSE:VZ) in its Q3 2024 investor letter:
“While some economic activity has been showing signs of slowing, the defensive composition of the current high yield market with a high mix of higher quality credit and short duration has let the rates tailwind overwhelm such concerns. The lowest quality sectors of the market have performed best, fueled by both soft/no landing expectations, as well as two positive events in the beleaguered telecom space. Telecom/cable have been poor performers year to date due to overhang from the growth of FWA (aka “wireless cable”) and increased fiber building, however the sector re-rated materially on two deals. Second, Verizon Communications Inc. (NYSE:VZ) announced a deal to acquire Frontier Communications (FYBR), a transaction which the fund benefited from by virtue of its investment in FYBR debt. This transaction, aimed at increasing’s VZ fiber footprint, has led to broad revaluation of fiber retail networks that we think is appropriate. While we continue to expect to see FWA rapidly erode non-upgraded cable and especially copper’s share of the low-end broadband market, the VZ deal underscores the value of the higher end footprint.”
