It could be the start of something big in 2020 for Nokia (NYSE:NOK), but is it worth buying into today? Let’s take a look at a couple of catalysts off and on the Nokia stock price chart to secure a stronger risk-adjusted outcome for investors.
The anxiously-awaited roll-out of the 5G or fifth-generation network, which is magnitudes faster than a speeding bullet and no longer a fantastical dream, is upon us. The technology is being deployed in 2020 and allows for the transmission of data at 10 to 100 times the speed of today’s sprawling 4G network. And that’s huge for today’s bandwidth-hungry applications.
In a world where nearly 5 billion videos are watched on Alphabet’s (NASDAQ:GOOGL) YouTube every single day, 5G obviously can’t get here soon enough. Of course, that’s just the tip of the iceberg too. And alongside familiar U.S.-based telecom giants Verizon (NYSE:VZ) and AT&T (NYSE:T), tech behemoth Cisco (NASDAQ:CSCO) or chip giant Qualcomm (NASDAQ:QCOM), Nokia is in position to cash in on its deployment.
A Closer Look at Nokia Stock
Nokia has been aggressive in securing 50 global deals inside the framework of 5G’s integration. Part of this success is the company’s high-capacity AirScale product. It allows customers to quickly upgrade from 4G to 5G. Moreover, Nokia has over 300 existing commercial 4G clients, all of which will eventually begin their transition to 5G. As much, to believe Nokia stock died with the cellular flip phone era could be a mistake.
There’s also more to today’s Nokia story than just 5G to help propel shares forward. Nokia has been aggressive in allowing global enterprises to work within a single, smart virtual network to better facilitate cloud applications and IoT. NOK stock is also an investment into the future of quantum computing.
It’s not alone by any means. However, the company has discovered critical superconducting materials that are capable of allowing this field to become one of the market’s next, next big things. And that could be another massive opportunity for NOK stock.
Lastly and no disrespect to many of my colleagues at InvestorPlace, a fairly uniform wet blanket of varied Nokia stock warnings has perked this strategist’s interest. And given NOK stock’s 5-year growth rate of nearly 14% and today’s well-positioned, low-risk, high-reward opportunity on Nokia’s monthly price chart, there are a couple more powerful reasons to consider owning Nokia stock.
Nokia Monthly Chart
Nokia might seem like a relic from Christmas’ past prior. And if you look back to the bubble preceding the financial crisis or Dot.com era, there is evidence to build a technical case against NOK stock. Here too though, there are reasons to consider buying Nokia shares for a stronger future.
Technically and looking beyond 2012’s ugly low-water mark, NOK stock has established a lower-low variation of a double-bottom formation over the last three years. The corrective pattern has filled a monthly chart price gap and modestly undercuts the 62% retracement level tied to Nokia stock’s 16-year low. Nice, right?
In all fairness, NOK’s price action isn’t unequivocally bullish, but it outweighs the bad in our assessment. Further, combined with an oversold monthly stochastics setup and December’s inside price action contained by November’s doji candlestick, the determined double-bottom in NOK stock is afforded stronger credibility. Still, to go from increased pattern reliability which simply hopes for the best, I’d warn today’s investors to patiently wait.
The Bottom Line on Nokia Stock
I’d suggest buying NOK stock if shares can reclaim $3.85. This strategy waits for shares to confirm the monthly chart pattern low. It also requires NOK stock to rally above the double-bottom’s initial pivot and back through the past couple of month’s slight breach of Fibonacci support. This buy strategy should also allow for stochastics to signal a bullish crossover.
Arguably, this entry method gives up some modest return potential, but it guards against getting in prematurely.
What’s more, with a focus on more than just better days ahead for Nokia and more importantly, stronger months and possibly years of outperformance, waiting to purchase NOK stock looks like a prudent one.
Disclosure: Investment accounts under Christopher Tyler’s management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional options-based strategies and related musings, follow Chris on Twitter @Options_CAT and StockTwits.