Analyse a stock: Vodafone

AstonMartin

The best way to learn how to invest in a company is by doing so.

We can analyse a company together and learn from the process.

NASDAQ: VOD (Last Trade:26.37)
FTSE: VOD.L (Last Trade:168.82)

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From a professional investor at the beginning of 2010:

"Even in these difficult economic times, people are upgrading their cell phones," says Amy Calistri, who selects Vodafone (VOD) as her top pick for 2010.
The editor of Stock of the Month, adds, "Smartphone sales have been robust throughout the recession, as people want to access the latest technologies and features."
The advisor continues, "Every one of those latest generation cell phones taps into a wireless service provider.
"And as essential as we consider it here in the U.S., cell phone service means everything to emerging and developing countries where landline infrastructure barely exists.
"Africa is actually the fastest growing wireless market in the world. With little landline infrastructure and an average population that is still some distance from computer ownership, cell phones have become Africa's link to the world.
"So where can you find a company that has the loyalty of the stable U.S. wireless market but also has inroads into the fast-growing African subscriber base?
"Vodafone is the largest wireless communications company in the world, with operations in Europe, the U.S., the Middle East, Africa, and Asia Pacific. Its owns a 45% stake in the largest U.S. wireless communications operator, Verizon Wireless.
"Along with its stable Verizon U.S. subscriber base, VOD also owns an interest in the growing base of African subscribers. Vodafone has a 65% stake in South Africa's Vodacom. Vodacom currently has 41.6 million subscribers, but that is expected to grow.
"I especially like dividend-paying stocks in challenging markets. After all, capital gains can ebb and flow, but cash in hand is yours to keep forever.
"Vodafone's dividend yield is approximately 6% at current prices. While other companies are throwing their dividends under the bus, VOD management seems committed to keep the income flowing.
"Vodafone has instituted a 'progressive' dividend policy that boosts the dividend based on rising free cash flows, even if earnings fall.
"And of course because the dividends are first determined in British pounds and then converted to U.S. dollars, a continuation of the U.S. dollar's declining value will boost the payout to U.S. investors."











Would you invest in Vodafone?
At what price do you value the share at?
If you bought now at what price would you sell?
What sources did you use to analyse this company?

Jim2007

AstonMartin wrote: »

Would you invest in Vodafone?
At what price do you value the share at?
If you bought now at what price would you sell?
What sources did you use to analyse this company?

I don't invest in tech companies as a rule, but for the sake of debate, here is my 5 mins of research:

- No
- I would not purchase above a price of about $18
- Would depend on company performance and how value stacked up against price
- AAII database

That is not to say that it will not do well, it is just not for me.

Good luck with that,

Jim

alanceltic

My 2 cents, if you are going to look at Vodafone I think it would also be worthwhile looking at one of their peers - Telefonica (O2). I bought into this share on one of their dips (15.50), their share price currently stands at 17.20 but has touched close to 20.00 a few weeks ago.

I would disagree that either of these shares is a tech stock and they wouldnt have the same risk profile as a tech stock, sure they are very dependent on future technologies and they invest heavily on R&D but their core business is mobile communications and increasingly mobile data communications.

Both companies have saturated their home markets and margins are at an all time low in these developed sectors and BOTH are looking for strategic long term growth areas, Telefonica have recently secured a very important deal in Brazil and they are putting most of their focus on this emerging market for future growth. Telefonica also have extremely strong cashflows and are highly focused on shareholder returns. The 2010 dividend stands at 1.40 which returns 8.1% based on todays share price but they have guided 1.75 (i think) for 2011 which would return 10.1% for next year. This seems a decent premium on Vodafones returns but im not too familiar with other aspects of Vodafones business so I wouldnt be prepared to benchmark one against the other in other areas. It is also worth noting that Telefonica have hit their earnings & divident targets for the last number of years so I wouldnt question their proposed dividends for 2011 and their management seem very prudent in their results forecasts.

On a side issue, has the article with respect to smartphones brought this on your attention??? It is certainly something which has crossed my mind as I think there is huge growth in this area which hasnt been factored into some share prices but i was more thinking that there would be opportunities with the handset manufacturers more so than the data carriers. I just cant help but think Nokia are on a hiding to nothing as they backed the wrong horse with their operating system and "android" seems to be stealing a march with HTC becoming market leaders overnight. I would be very interested to see someone elses slant on this sector in conjunction with why this thread was started

Mr_Roger_Bongos

Like the thread format you've suggested OP, I hope to contribute at the weekend!

AstonMartin

Mr_Roger_Bongos wrote: »

Like the thread format you've suggested OP, I hope to contribute at the weekend!

Practical learning is always the way to go. Hopefully you will contribute and some other seasoned investors will give their view on the stock.

AstonMartin

Surprised with the level of knowledge shown in other posts that nobody is willing to help us out with this one.

mono627

AstonMartin wrote: »

Surprised with the level of knowledge shown in other posts that nobody is willing to help us out with this one.

Analysing a stock is a time consuming process. People who work in the industry are more than likely up to their eyes with work that they may not have the time to lend to every thread posted on the forum - nothing to do with lack of willingness to help. Don't take it personally.

What research have you done on it yourself?

Examined key financial ratios? Analysed debt levels? Done a FCF analysis? Done any valuations? Analysed management? Looked at dividend policy? Comparative industry analysis? Analysed where future growth will come from? DCF?

Best way to keep this thread going is to get the ball rolling yourself.

Edit: I'm also with Jim on this one, I don't particularly like Tech stocks as a long term investment. Too much inherent risk involved.

alanceltic

AstonMartin wrote: »

Surprised with the level of knowledge shown in other posts that nobody is willing to help us out with this one.

I gave you a VERY brief summary on one of their peers O2 and detailed some of their forward strategies along with divident profile. I also tried to expand the thread by shining a light on the handset manufacturers hinting that Nokia could be on a hiding to nothing due to HTC's emerging dominance. Nokia has capitulated in the last 2 weeks falling 24% and HTC continues its upward growth pattern.

It would be helpful if you CONTRIBUTED and gave your opinions instead of waiting for it to be handed on a plate to you. There are some very good contributors on here but you have to give a little to get a little.

AstonMartin

Fair enough. It will be amateur hour when i get back with this. Will probably take two weeks or so.

buzz11

I want to avoid buying Vodafone on the UK exchange because of the 10% tax on dividends, which exchange is next best?

Thanks!

coylemj

The tax on dividends is dependent on where you live surely - not on where you buy them.

buzz11

Jill Kirby had a question on this in ST 2 weeks ago, here it is;http://photos3.pix.ie/CA/F4/CAF4DD9A17A04211BB5E998F1CE85ED7-0000346192-0002624685-01200L-0C63FEB9EDF34C229923DFA2005BC863.jpg