Actually, I’m going to make it my international stock pick for 2007. I think it’s a long-term hold as it fulfills a number of coveted Foolish investment principles, including status as a leading consumer brand, dominant share in a mass market with repeat purchasers, and strong historical performance and cash flow generation, with equally compelling prospects going forward.
More specifically, Nokia dominates the global cell phone market with an estimated 30% market share, or roughly double Motorola’s (NYSE: MOT) share and almost three times as large as Samsung’s piece of the pie. It’s effectively a three-horse race as the trio collectively controls over 60% of the market, and no other player holds close to 10%.
So how does Nokia use its size leadership to its advantage? For starters, its scale allows it to post operating margins in excess of 13% by squeezing suppliers and pushing for better terms from customers that include Vodafone (NYSE: VOD), Sprint (NYSE: S), and Verizon (NYSE: VZ). It also posts industry-leading returns on invested capital due to solid free cash flow generation capabilities and has a decent dividend yield of 1.8%.
Source: The Motley Fool
Buy! Buy! Buy! Nice to see a stock analyst show his support, all it takes is one, then they’ll all start checking out his pick.