By Liu-Yue (Louie) Lam, Co-Founder, Oxstone Capital Management,
Nok, Nokia – Finland, $10.21, 11/12/2010
Nokia is still the world’s largest cell phone maker. Its leading market share position (at 33%) helps it achieve economies of scale in low cost production through standardized features and equipment. The new CEO and additional senior management changes will seek to fuel new R&D to produce new products and better compete against Apple and RIM in the smart phone market.
Financially, Nokia is in good shape with positive net cash. It currently trades at the bottom of its 52 week price range and near multi-year (5+) lows. Nokia pays a very attractive bond-like yield of 3.8%, but with all the upside potential of a stock. Current valuation is reasonable at PEG Ratio of 1.31x and a forward P/E of 11.5x. Its standardized products allows for product efficiencies. With minimal capex requirement, Nokia is still a cash machine spinning off plenty of cash for increasing dividends or investing in new product opportunities.
Nokia remains a trusted brand name and has enormous opportunities to cater to the emerging market consumer markets across the globe. The long term structural weakness in the Euro will help spur increase sales through better competitive pricing.cellphones, emerging markets, Equities, european stocks, Finland, finnish stocks, investments, Liu-Yue (Louie) Lam, NOK, Nokia, Oxstone Capital Management, oxstones, oxstones investment club, stock market, stocks, Western Europe