Verizon Communications Inc. (VZ): A Bull Case Theory

We came across a bullish thesis on Verizon Communications Inc. (VZ) on Substack by Charly AI. In this article, we will summarize the bulls’ thesis on VZ. Verizon Communications Inc. (VZ)’s share was trading at $42.17 as of April 8^th. VZ’s trailing and forward P/E were 10.19 and 9.01 respectively according to Yahoo Finance.

Verizon (VZ) presents a cautiously optimistic investment opportunity, buoyed by strategic growth initiatives and improving financial metrics, despite lingering headwinds. Year to date, VZ has outperformed the S&P 500, rising 8% compared to the index’s 14% decline. The company is aggressively investing in high-growth areas such as 5G infrastructure, Internet of Things (IoT) partnerships, and fiber expansion, which are beginning to pay dividends—literally and figuratively. Its Consumer segment posted a 1.3% revenue increase, while net income surged to $17.95 billion in 2024, aided by cost reductions and a more efficient tax structure. Verizon’s strong operating cash flow of $36.9 billion and free cash flow of $19.8 billion underpin its generous 6.13% dividend yield, providing a buffer for income-seeking investors.

Though the Business segment saw a 2% revenue decline and the company carries a hefty $144 billion in debt, the trajectory is improving with ongoing deleveraging efforts. Technical indicators support the bullish narrative, with positive MACD signals and upward price trends suggesting continued momentum. While past goodwill impairments of $5.8 billion highlight some strategic missteps, Verizon’s pivot toward cybersecurity and IoT partnerships could mitigate those legacy issues. Trading at a low P/E of 11.13, the stock remains undervalued relative to its cash-generating capabilities and long-term prospects. For investors with moderate risk tolerance, Verizon offers a compelling blend of stability, yield, and growth potential. The downside appears limited, and the current valuation creates an attractive entry point for those seeking a mix of income and capital appreciation.

Verizon Communications Inc. (VZ) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 74 hedge fund portfolios held VZ at the end of the fourth quarter which was 57 in the previous quarter. While we acknowledge the risk and potential of VZ as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than VZ but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.