The company proved itself to be competitive in the market by acquiring Earthmine Inc. last year. Nokia has also shown its financial teeth in selling patents to Vringo Inc. for a sizable profit. Such large financial investment could be a reason why the company’s dividend yield has increased by 7% in the past year. However, the same investments can also be attributed to the company’s $3.98 billion net loss in the past 12 months. Considering all these things, Nokia has done extremely well this year with over $36.68 billion in sales. This does not include the private contracts held between the company and the U.S. government or the sub companies of Nokia.
According to Zacks, Nokia has held a daily average of $3.11. Today the market closed at $3.37 with an $0.11 increase from its prior day. Over the past year Nasdaq has reported Nokia stock to have a high of $5.52 and a low of $1.63. The past six months have shown an increase of 24.40%. At such a low price, the investor would be advised to accumulate this stock in large amounts in order to yield a higher return upon selling. Those already invested in Nokia stock would be wise to increase the amount of stock owned while the prices are at a decent low. An overview of the past 10 years as reported by MSN Money will show that Nokia stock in its prime sold in the upper $30s to the low $40s. With the steady increase in shares, it can be concluded that the stock will again reach into the higher numbers. The past year has shown a 3.98% increase with the majority of that increase occurring after July 2012.
Comparing Nokia stock to that of its competition, the company value is lower. Nasdaq reports Nokia to have a $2 billion dollar company value. The next company would be L-3 Communications (LLL) with a company value of $7 billion. I would not consider Nokia to be in the same competitive field as the other companies such as Motorola Solutions (MSI) (worth $17 billion) or Qualcomm (QCOM) (worth $117 billion) even though they are technically listed as such. The company value margin is too great for MSI or QCOM to consider Nokia a threat, and Nokia’s value is low enough that they do not need to worry about the larger companies at this time. This would be a red flag indicator, should the company stock not constantly increase.
The conclusion for this stock is to buy, especially for the new investor. The price is quite affordable, which limits the margin of financial ruin should the company fall, something that is not likely to happen. Looking at the financial trends over the past years, along with the increase in stock, one can only conclude that the low share prices are temporary for the company.
For those already invested in Nokia, I would urge them to hold their shares as the market is too low to gain a substantial return on investment. If the market continues along its current path, the investor will have a much higher yield in the months to come. It has been estimated that the shares will reach between $8 to $10 by year-end. Buy low and sell high is definitely the playing card for this stock, although one should be careful not to invest too much in the stock. Because the company value is so low, it would not be overly surprising to see Nokia look for a sellout or merger with a larger, more stable, company. The increase would tend to lead one to believe Nokia is not done climbing.