<p>Low-priced stocks have been under a hell of a fire, as investors dump everything in this latest volatility. Gold, stocks, cryptocurrencies – you name it and it’s for sale right now. Nokia (NYSE: NOK) is no exception to that observation, with the NOK share down about 40% from the peaks in February.
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Even worse, Nokia shares have fallen nearly 60% from the highs for 2019. Shares closed last week at close to $ 2.75 per share, the lowest weekly close since 2013.
Of course, this type of division has had a serious impact on technology. That situation can either be aggravated or repaired, and given the market environment, it is difficult to know which one.
Let’s take a closer look at Nokia to see if this stock really is a buy right now.
Buying Nokia is a 5G game and investors are hoping that new partnerships will drive growth for the company. Some of its most recent partnerships include Marvell Technology (NASDAQ: MRVL) and Intel (NASDAQ: INTC).
With 5G as the catalyst for Nokia, investors fear a slow or delayed launch along with lower 5G investments from other companies.
Based on comments from AT&T (NYSE: T), Verizon (NYSE: VZ) and others, a delay does not seem to be in the cards yet. But with how cash flows and customer expenses dry out, a delay in CapEx is a realistic possibility and thus 5G expansions can easily take a back seat until there is more clarity in the world.
If this is the case, Norwegian shares may come under further pressure. However, if 5G progresses as previously expected, the share may return. This creates a somewhat binary situation, which is admittedly somewhat unattractive to many investors.
As it stands, analysts currently expect earnings of 27 cents per share this year. This is despite a forecast for a 3.5% reduction in revenue to $ 22.3 billion. At this point, extrapolation of 2021 forecasts seems like a lost cause.
With a profit of less than 10 times, NOK shares may seem attractive to investors. But it depends on growth this year and next.
Remember that Nokia is still not a positive cash flow. It has EUR 6.1 billion in cash and short-term investments and current assets of EUR 16.8 billion. But it is only rising towards 12 billion euros in current liabilities. There is also EUR 3.9 billion in long-term debt.
At the end of the day, if 5G develops as investors hope, the NOK share should be good. If not, there are fears of short-term growth.
Take a look at the long-term weekly chart above. Last week, the NOK share blew straight through the 2019 situation. Shares bounced off $ 2.50 and closed just below $ 2.74. So how do we get 100% higher movement or 50% reduction lower?
It’s worth noting, just because it’s possible does not mean it will happen. But the numbers are not compensated for a convenient headline. A doubling from the latest low level would send Nokia around $ 5 per share.
Nokia shopped near this brand just a few blocks ago. It is also close to several long-term moving averages, especially 100-week and 200-week moving averages. Even a return to $ 4 would be significant from these low levels.
On the downside, another 50% haircut would drop NOK down to $ 1.40. It would require NOK shares to burst below last week’s lowest level and take out the $ 2.50 level. If it does, it may be on its way to 2012 lows.
To keep it simple for short-term investors, technically a concern is below $ 2.50. Over $ 3.50 moves speed back to the bulls.
Bottom Line on NOK Stock
If the markets were not in turmoil, I do not think there would be much debate about Nokia shares – shares would be a buy. But due to the circumstances, things can either get much worse or much better.
It all depends on whether we see a temporary global economic stop and a quick snapback, or a long-term drag on the global economy. Until we know more, investors can find more comfort when buying stocks with a stronger financial position.
Bret Kenwell is the director and author of Future Blue Chips and can be found on Twitter @BretKenwell. At the time of writing, Bret Kenwell had no position in any of the above securities.