- The stock has more than doubled over the past 52 weeks by meeting turnaround goals.
- The company continues to execute on the plan with the introduction of new products.
- It is not out of the question the stock could double again, yet a 50% gain is more likely.
I have been a huge fan of Nokia (NYSE:NOK) for quite some time. The stock is up over 100% since my last article when I recommended buying the stock. I stuck my neck out with that article due to the fact many believed at the time Nokia was heading for bankruptcy. In the following sections, I will lay out my bull case for the stock going forward.
The turnaround story is intact
Presently, the risk/reward equation has improved greatly in the stock. The company has proven itself to many by meeting fundamental expectations and introducing amazing new products well received by the public. The company's ability to execute on plan has underpinned the stock's performance. The stock is up 125% over the past 52 weeks.
The fact the company has been able to overcome the competition and meet earnings estimates has lowered the risk for long-term holders in the stock significantly. The question is can the company continue to hit the ball out of the park? I posit it can.
New products and deal rumors swirl
Nokia's stock spiked Monday on news the company will be the preferred provider of smartphones for CaixaBank. Nokia announced that CaixaBank, a leading financial group in the Spanish market both in banking and insurance, chose Nokia as the company's preferred provider of employee smartphones. The agreement includes the purchase of approximately 30,000 Nokia Lumia devices.
This is great news for the company. Every time Nokia locks down a blue chip client such as CaixaBank that is the best advertising you can buy. I expect this news may propagate more deals for the company. The fact that CaixaBank chose Nokia over all the competition is telling of the phones' potential superiority.
New 630 and 930 phones possibly unveiled tomorrow
The Nokia Lumia 630 and 930 may be revealed tomorrow at the 2014 Microsoft Build conference scheduled to take place from April 2 to April 4, 2014, in San Francisco according to a leaked report provided by Geeky-gadgets.com. The report states the 630 will be a mid-range budget smartphone available in single and dual-SIM versions. The phone will be offered with a variety of color choices.
The Nokia Lumia 630 features and specs include a 4.5-inch screen display with 854x400p resolution, a quad-core Qualcomm Snapdragon 400 processor, 1GB of RAM, 8GB internal storage capacity and 5MP rear-facing camera.
Furthermore, the Nokia Lumia 930 is expected to be unveiled as well. The 930 is expected to replace the Nokia Lumia 920 for AT&T. According to the leaked report, the 930 features will be analogous to the already released Verizon Nokia Lumia Icon phone.
The Nokia X possible hit in China
The Nokia X recently went on sale in China and sold out of the first batch of 10,000 phones in less than four minutes according to unconfirmed reports from JD.com, a major online retailer in China. Further, the retailer reports the Nokia X had about 1 million pre-orders over the first four days. It should be noted that pre-orders in China are not the same as they are in the US. Pre-orders are only a reservation to buy, requiring no deposit. So it remains to be seen how many of these orders come to fruition. Nevertheless, these results are not a bad start.
(Image provided by Andriodheadlines.com)
Moreover, this proves there may be significant interest in Nokia's first Android phone. This is great news for the company as Nokia attempts to diversify its product line from exclusively offering Windows based phones.
The stock has had a significant rally
The stock has rallied significantly over the last year. Whenever this happens expectations always get racketed upwards. The company will need to continue to exceed expectations to continue higher.
The competition is fierce
The competitive landscape for smartphones is incredibly fierce. With new phones coming online from major players, it remains to be seen if Nokia can regain past glory and become a major player in the space. Currently, the company hasn't cracked into the top ten as of yet.
I posit Nokia's performance over the past year is an excellent indicator of the company's ability to deliver on its promises. With the solid lineup of new phones coming out, the recently inked deal with CaixaBank and the success of Nokia's first Android Phone in China, I see no reason the stock cannot continue higher. A doubling in the stock over the next year may be a stretch though. Nonetheless, it is entirely possible based on current fundamentals and future sales expectations. Taking a more conservative view, I see the stock gaining more along the lines of 50% over the next 52 weeks.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in NOK over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.