Nokia (NYSE:NOK) isn’t a name that’s synonymous with technology leadership. And NOK stock hasn’t been held up as an example of a growth stock in many years.
In both cases, that goes back about 15 years, when Nokia smartphones dominated the market. With Nokia’s stock down about 90% from its heyday, many investors have written the company off as a tech industry has-been. However, Nokia shares have been on the move since the stock market crash last March.
Since then, NOK stock is up 113%. So far in 2021 alone, it’s up 50%.
That year-to-date performance is considerably better than what other tech companies have done so far this year. Including the maker of the iPhone — the company that toppled Nokia from its position as the smartphone leader.
So is Nokia making a comeback? Does that make Nokia a growth stock again, and one worthy of consideration for your portfolio? It’s time for a closer look at this Portfolio Grader B-rated stock.
Feature Phones Come Full Circle, Will Nokia?
In 2007, Nokia shares were flirting with $40. At the time, the company owned 49.4% of the global smartphone market. Go back even further, to 2000, and NOK stock was near $59. That was its all-time high, and reflected Nokia’s dominance in the rapidly growing cell phone market. What we would now call feature phones.
Flash forward to 2021. Nokia-branded smartphones are being sold once again after a tumultuous decade that saw the company sell off its mobile division and then license the Nokia name to HMD Global.
As InvestorPlace’s Stavros Georgiadis recently pointed out Nokia-branded smartphones are a small player in the smartphone market with less than 1% global share. Nokia now makes its money from other tech products including networking and telecom infrastructure, network security solutions, Wi-Fi routers, smart lighting and smart TVs.
Ironically, while there has been little uptake on smartphones bearing the Nokia brand, the humble feature phone business (also run by HMD Global) is doing quite well. Currently, those Nokia feature phones hold the third place globally in sales. And believe it or not, feature phones are still popular, especially in developing markets. In Q4 2020, over 80 million were sold, worldwide.
If Nokia feature phones can make a comeback, why can’t the company whose name is emblazoned on so many of them?
Growth or Recovery?
As I mentioned in the intro, NOK stock is up 113% since the 2020 stock market crash. Impressive, but the highest close since then for NOK has been $6.55 on Jan. 27. That was as a result of some Reddit-fueled mayhem that saw NOK surge nearly 40% in a single session.
Yes, it joined the rank of meme stocks. As expected, it plummeted the next day. Classic meme stock behavior.
Take that one-time spike out of the equation, and NOK stock’s high close for 2021 was $6.29 at the start of August.
That inarguably represents a considerable gain from NOK’s $4.37 pre-crash 2020 high close. The good news if you’re on the growth bandwagon is that shares are well past their pre-crash 2020 level.
In other words, they haven’t just recovered to pre-crash levels, they’ve gained further ground. That’s looking like growth momentum — although NOK has been treading water through since the end of October. There’s no reason why 2019 levels (NOK’s high close for that year was $6.60) should be a ceiling that keeps NOK stock from eventually going higher.
Bottom Line on NOK Stock
It’s not difficult to find investment analysts who buy into the idea of a Nokia comeback and continued growth.
The Wall Street Journal is tracking 29 analysts who cover Nokia. Their consensus rating for NOK stock is “overweight.” Their average 12-month price target is $7.01, a price that offers 19% upside.
At this point I think the case is becoming pretty solid for Nokia as a comeback story. That’s likely to translate into long-term growth for NOK stock, although it will be tough to replicate the numbers it’s put up since March 2020.
— Louis Navellier and the InvestorPlace Research Staff
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Source: Investor Place