With Huawei at the crosshairs of the U.S., on grounds of national security, a few networking firms stand to benefit. Cisco Systems (NASDAQ: CSCO) and Nokia Corporation (NYSE:NOK) could win more network contract deals in North America, Europe, and Asia as countries withdraw their orders from Huawei. Already, Nokia is trading in a wide range of between $5.20 - $6.00 since August. And the trend line is up for good reason.
Nokia’s forward P/E is reasonably low and does not reflect the EPS growth in the next five years. As Huawei loses business deals, Nokia will sign on more 5G builds. China may have to speed up orders of 5G networking to keep up with the rest of the world.
Nokia is winning Wall Street’s support. On Dec. 11 BofA Merrill Lynchadded the stock to the Europe 1 list and set a EUR 5.50 (USD $6.22) price target. This is still below the $6.50 average target price (per Tipranks).
Dividend Income
Nokia, which spent years pivoting its business away from dumb phones and smartphones (to a lesser degree), is about to report revenue growth over the next few years. Its acquisition of Alcatel-Lucent allowed the merged firm to cut out costs. And now that 5G infrastructure building rolls out in Korea and then in the U.S., through AT&T (NYSE:T), Sprint, and others, Nokia may trade in the double-digits a few years from now. Shareholders may enjoy the 4% dividend yield in the interim.
