In the early 2000s, Nokia was regarded as a technological marvel. The business formerly dominated half of the smartphone industry, but it has since lost prominence in the area to competitors.
Despite significant changes in its business, Nokia continues to draw investment interest. It was formerly the dominant manufacturer of mobile phones, but in the 5G era, it has repositioned itself as a telecom equipment stock.
Furthermore, it has recently piqued the interest of Reddit traders as a meme stock, owing in part to its cheap per-share price.
Meme stocks have the potential for quick upward movements that traders might profit from, but will this telco company yield genuine riches for long-term investors? Nokia stock recently soared when the firm announced that it will improve guidance for the following quarter.
The news increased the stock price by 9% on July 13, and it has generally maintained those gains in the days afterward. Nonetheless, Nokia’s market valuation has fallen by around 4% over the previous five years despite the recent stock price boost.
Do you plan on adding Nokia stock to your investment portfolio? This post reviews everything you need to know about Nokia stock and helps to ultimately determine “Is Nokia stock a good buy?”
What is Nokia Stock?
Based in the greater Helsinki area of Finland, Nokia is primarily a hardware, software, and telecommunications firm.
Nokia, which was founded in 1865, presently employs over 100,000 people in over 100 countries. During the dot-com boom of 2000, Nokia’s stock price peaked at more than $59 a share.
Outside of 2000, Nokia’s most profitable year was 2007, when it was the world’s best-selling mobile phone firm, with more than 40% of the market share.
In October 2007, the stock price of NOK reached a new high of over $40. Nokia has continued to minimize expenses in order to prepare for the ongoing transition to 5G technology.
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What are the Pros and Cons of Owning Nokia Stock?
Pros
Impressive network
NOK has developed a high-performance, end-to-end platform that supports mobile networks, fixed networks, IP/optical networks, applications, and analytics.
As a result, the firm has been able to sell to a diverse range of clients, including those in energy, government, and transportation.
Furthermore, the recent acquisition of Gainspeed has aided in gaining cable operator clients. However, the real game is for 5G mobile networks.
According to a forecast by Telefonaktiebolaget LM Ericsso, the market would reach 550 million subscribers by the end of 2022. The Internet of Things megatrend, which encompasses wireless connectivity between devices as well as video and VR, will be a crucial driver.
The technological advancement of Nokia soothes the concern of investors wondering “Is Nokia a good stock to buy?”
Promising dividends
NOK expects to save €1.2 billion per year as a result of its transformational acquisition of Alcaltel Lucent. And these may turn out to be pretty conservative in the end. If anything, NOK has demonstrated a remarkable capacity to be cost-conscious.
In other words, when the network industry begins to recover, margins are anticipated to grow over time. In the meanwhile, investors will most likely benefit from a competitive dividend yielding roughly 6%.
Innovation
Nokia Technologies is the division responsible for consumer and professional high tech such as digital health and media. Although, for the most part, the majority of the company’s development has come from licensing its enormous product portfolio. However, NOK is spending much on its own ideas. The business, for example, has created a comprehensive virtual reality system for professionals.
Nokia is also attempting to enter the smartphone industry. Hon Hai Precision Industry Co. Ltd. will build the gadget known as the Nokia P. Nokia stock has also become more daring as a result of mergers and acquisitions. The firm is a forerunner in the linked health industry, having developed digital weighing scales and baby monitors.
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Cons
Competition
Despite the consolidation, the networking industry remains fiercely competitive. To be fair, some of the competitors aren’t really formidable. However, these businesses may still be quite problematic since they are frequently motivated to participate in pricing wars.
However, the largest danger to NOK stock might come from Chinese carriers like Huawei and ZTE. They profit not just from low-cost platforms, but also from preferential access to their own markets.
Furthermore, growth has been rapid. Huawei’s sales increased by 40% to $36.8 billion in the first half of this year. However, the corporation has a diverse income base that includes not just networking equipment sales but also smartphone sales.
The competitive nature of the telecommunication sector is the main concern of investors and it leads to questions like “Is Nokia a good stock to buy?”
Mixed financial picture
Despite difficulties, Nokia’s business improved in the most recent quarter. Year on year, net sales climbed by 3% to a little under $6.2 billion. Unfortunately, a closer look at the income figures reveals the shaky nature of this gain.
Three of the company’s five divisions reported decreased revenues, accounting for 59 percent of overall sales.
Nonetheless, sales from the network infrastructure sector, which includes the company’s 5G equipment business, climbed by 22% year on year. It was the only division that had a double-digit percentage increase.
Nokia Technologies, the company’s consumer products subsidiary, increased sales by 5% over that time period. With a mixed revenue picture, the firm may struggle to maintain its progress.
It’s not as cheap as it may seem
Finally, investors must comprehend why Nokia’s stock price is so low. When casual investors find this stock selling for less than $5 a share, they may believe they have got a steal. Many traders are undoubtedly hoping for a jump in Nokia.
However, a quick check of Nokia’s 5.7 billion outstanding shares explains why that may not be the case. With so many shares available, potential purchasers will almost certainly be able to find them without having to bid considerably more on the stock price.
Furthermore, Nokia’s stock price of roughly $4.98 per share (at the time of writing) gives it a market valuation of around $28.6 billion. That makes it a large-cap stock, which is unique among penny stocks, the majority have market values of less than $1 billion.
Nokia’s share price would have to go much below $2 per share in order to fall below the $10 billion market value requirement required to preserve large-cap status. As a result, investors should not consider this a cheap stock despite the low nominal price.
How to Buy Nokia Stock?
Step 1: Select a brokerage
Whether you want to purchase Nokia as a long-term investment or as a day trader, you must first create a brokerage account. A broker is a financial services organization that operates as a link between an investor and a stock exchange, eventually buying and selling stocks on your behalf.
A variety of brokers provide both free and commission-based trading platforms. Because NOK is traded on the New York Stock Exchange, you may buy and sell it at any brokerage company in the United States.
When deciding which broker to employ, you should look at the brokerage firm’s fee structure, research tools available, and order types supported.
STEP 2: Decide on investment amount
After you’ve opened and funded your brokerage account, you’ll need to select how many NOK shares you wish to buy. Begin by examining the current price of NOK and determining how much money you are ready to risk.
Assume that your order will be completed at a price close to the current market price if you invest today. Keep in mind that the value of your investment might fall at any time, so use the NOK historical chart to help you decide when to sell.
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STEP 3: Select market order type
The kind of order you choose will determine the amount you are prepared to pay, the period for execution, and other factors.
Choosing the right order type gives you more control over the order’s execution and your investment. Limit orders, market orders, stop-loss orders, and stop-limit orders are all common market order types.
STEP 4: Buy your NOK stock
Once you’ve completed your order form and sent it to your brokerage, you’re finished. The time it takes to fill your order is determined by the type of order you placed, current market circumstances, and the average price of NOK.
Most brokers will notify you when your order is completed by push notification or email. If your order is not filled within market hours, you may have to place it again the following day, depending on your broker and the type of order made.
Is Nokia stock a good buy for your money?
Nokia continues to establish mobile standards, but it is now on the other side of the fence. Nokia currently manufactures mobile carrier equipment, having purchased the old wire phone infrastructure players along the way.
However, in 2021 the introduction of 5G Nokia became a winner again in the tech space. Nokia’s shares have increased by more than 45 percent, rising from $4 to more than $5.50 a share, making it a solid investment.
Such advancements have assuaged investors’ concerns about “Is Nokia a good stock to buy?”
FAQs Is Nokia Stock a Good Buy for Your Money?
Yes, Nokia is a good stock to buy due to its affiliation with the innovative 5G future.
No, Nokia does not currently give dividends.
Nokia is predicted to reach a median target of 6.83.
Nokia is estimated to have Annual cash on hand of about $9.4 million
Yes, the forecast for Nokia stock is bullish.
Conclusion
With the exciting future of 5G, Nokia has positioned itself as one of the business names to watch. Meanwhile, NOK stock must cope with additional issues, such as the expiry of the majority of the licensed business.
If the organization cannot handle this, the revenue effect will undoubtedly be severe. This post has finally answered the question, “Is Nokia a good stock to buy?” to guide you in your investment choice.
References
- nasdaq.com – Nokia Stock Looks Like a Good Bet to Outpace the Market in 2022
- yahoo.com – Why Nokia (NOK) is a Top Growth Stock for the Long-Term
- fool.com – Could Nokia Be a Millionaire-Maker Stock?
- seekingalpha.com – Nokia Stock
- benzinga.com – HOW TO BUY NOKIA (NOK) STOCK
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