Verizon (VZ) is a favorable option for investors interested in a long-term growth investment. Verizon has the potential to rise in stock price as the advances in technology progress and the economy grows. It is strong in both the wireline and wireless ends of its business. Verizon also has a number of promising projects and ventures on the horizon that may lead to a significant rise in the stock price as early as this year. Verizon is the second-largest telecom entity in the United States and the fastest growing as well. It may eventually pass AT&T (T) as the largest telecommunications provider within the next five years due to a number of factors in the industry.
Verizon has an aggressive and diversified approach that can surely push it past its main competitors, AT&T and Sprint Nextel (S) within the next few years. Verizon's growth will correlate with domestic growth as a whole. It is the leading provider for businesses, consumers and the government as well. The U.S Army has recently chosen Verizon to support the military's online infrastructure and cloud computing on its private network. All of the fortune 500 companies currently use Verizon as their telecommunications provider. Verizon has a stronghold on both the wired and wireless services in America and abroad as well.
T-Mobile (DTEGY.PK) is currently trying to thwart Verizon's domination of the telecommunications markets. Verizon is set to purchase additional airwaves from Comcast (CMCSA) and Time Warner (TWC) for $3.6 billion and it is also negotiating with Cox Communications in a separate deal for $315 million. These purchases can ease the strain on Verizon's networks from the Apple (AAPL) and tablet devices. T-Mobile argues that this will concentrate too much airwave ownership within Verizon and will eventually lead to an increase in consumer pricing. Verizon owns 55% of Verizon Wireless. It has over 93 million retail wireless customers in a mobile market that generated over $120 billion in 2011. The number of wireless customers increased over 5% from the prior year and wireless revenue increased over 8% as well.
Both Verizon and AT&T saw a decrease in profits as landline subscriptions continue to decline. Verizon is offsetting this loss by rerouting its efforts toward building a stronger fiber optic network across the country (FiOs) and improving cloud computing capabilities as well. Aside from being chosen by the U.S. Army for the $250 million project, Verizon is improving the fiber optic network from New York to Chicago in order to capitalize on the high-frequency trading markets as well. Revenue and operating margins continue to rise due to the strong increase in FiOs and Verizon Wireless subscriptions are up 17% from last year. Verizon added over 190,000 FiOs internet subscribers to the wireline end of the business model; revenue per user has increased over 8% in conjunction.
Verizon is now the reliable provider of choice for the prominent businesses and governments in America. Verizon has diversified and inundated itself into daily operations for most businesses in a number of ways. Verizon Private IP Wireless increases the capabilities and reliability of machines and computers interacting and communicating without intervention. Verizon helps keep trains on track and on schedule, while vending can machines communicate to the distributor's office and alert management about customer trends and low items that need to be replaced. Verizon is even beginning to get involved with auto manufacturers in order to enhance consumer interaction.
Verizon has teamed up with CoinStar's (CSTR) Redbox in order to release a new product portfolio later in the year that will offer a similar structure as Redbox with streaming capabilities. It has also joined with Veveo to offer technology to enhance the FiOs TV interaction and search capabilities to improve browsing. If Apple follows through with the typical autumn release of a new iPhone this year, it will have a stronger impact on Verizon than the initial iPhone promotion. These scenarios alone may have the appeal to raise its stock price significantly by the year's end. Verizon is clearly the strongest of its competitors right now, it is not the biggest in market capital just yet but that is the premier time to invest before the price begins to rise.
It is clear to see that Verizon is focused on growing and focused on looking into the future. There is no hesitation to change what is not working or lacks profitability. Verizon is wisely pulling the DSL programs in favor of the FiOs opportunities across the country. Moving from landline and DSL will help avoid and mitigate the decrease in profit seen in the previous quarter. Focusing on improving the Wireline services as well as the Wireless makes Verizon a contender in every major telecom market and opportunity available. Verizon has around a million more subscribers in the cable market than AT&T. Verizon took a larger loss in landline subscriber revenue than AT&T by almost 3% this past year but its plan for the future is aggressive and expansive enough to secure its place as the primary telecom provider of the future.
Verizon has a larger number of wireless users and subscribers on the commercial end as well. It also has a larger gross margin and larger average revenue per user than both AT&T and Sprint. Its operating margin is 5% higher than the average and only trails AT&T in net income. Verizon's 4G platform and its place in the global economy in over 150 countries also separate it from its competitors. Verizon is showing strong growth in almost every aspect both fundamentally and technically. I feel like its stock price can steadily rise or see a serious increase from one of its diverse projects or an additional acquisition. To conclude, it is clear that the U.S Army, Fortune 500 businesses, countries abroad and most of the domestic consumers have chosen Verizon as the preferred telecom carrier for the future. The stock has traded steadily between $32 and $40 over the past year. I expect Verizon can finish above $41 by the year 2013.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.