Home analysis Vodafone shares are down 24% YTD. Should I invest?

Vodafone shares are down 24% YTD. Should I invest?

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Vodafone (NASDAQ: VOD) shares have weakened from $20.4 below $12 in less than several months and the current price stands around $13.9. When trading this stock, investors should have in mind that Vodafone is a stable company with a good position on the market.

Fundamental analysis: Vodafone is positioned to weather the COVID-related storms

Vodafone is a British multinational telecommunications company and one of the most geographically diversified global telecom operators. Vodafone released Q1 earnings results, total revenue declined only 2.8% Y/Y, mainly due to COVID-19 impacts and adjusted EBITDA outlook for FY 2021 remains unchanged.

According to the rumors, Vodafone could buy MásMóvil for €6B that would place Vodafone into a prime position in the Spanish telecom market. It is also important to mention that Verizon and Amazon may invest more than $4B to take a stake in India’s Vodafone Idea.

The company increased its revenue in 2019 to $49.56B from $48.98B in 2018 and the growth projects will ensure that the numbers will be moving up in the future. If we compare total stockholders’ equity of $69B and the market capitalization of $38B, we can notice that this stock is not overvalued.

Another useful information for potential investors is that this company has paid more than $1.9B dividends to its shareholders in the last three years and this number can be even bigger in the future. Vodafone shares are attractively valued currently and according to analysts, this company is positioned to weather the COVID-related storms.

This stock could be a good long-term investment but maybe now is not the best time for buying Vodafone shares because the price could weaken even more in the upcoming weeks.

Technical analysis: $11 represents a very strong support level

Vodafone shares have significantly underperformed the broader market so far in 2020. When trading Vodafone, you should have in mind that the price could weaken even more in the upcoming weeks.

Data source: tradingview.com

On this chart, I marked important resistance and support levels. The important support levels are $13 and $11, $15 and $17 represent the resistance levels.

If the price jumps above $15 it would be a signal to buy this stock and we have the open way to $16. Rising above $17 supports the continuation of the bullish trend and the next price target could be located around $19.

On the other side, if the price falls below $11 it would be a strong “sell” signal and we have the open way to $10.

Summary

My opinion is that this stock could be a good long-term investment but maybe now is not the best moment to invest in Vodafone shares because the price could weaken even more in the upcoming weeks. If the price jumps above $15 it would be a signal to buy this stock and we have the open way to $16.

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