Calling All Phones

Written by GSCR Staff   
Monday, 15 April 2013 10:23

Instead of calling this a down day in the market, we will focus on a communications stock. Today’s featured stock is Vonage Holdings Corporation (NASDAQ – VG - $3.00).  I am sure everyone has seen the somewhat obnoxious commercials, which is no doubt an advertising strategy to ensure that consumers remember Vonage.  Nevertheless, the company is a world leader in providing communications through cloud connected devices with nearly 2.5 million subscribers. 

 

The company offers voice and messaging services through session initiation protocol based voice over Internet protocol network.  It provides home telephone replacement services to residential, small office, and home office customers through various service plans with a range of basic features, including call waiting, caller ID with name, call forwarding, and voicemail.  The Vonage World Plan offers unlimited calling in more than 60 countries, and the Vonage Mobile App lets users make free high-definition calls and send free texts to all users of the app, worldwide. The app works over Wi-Fi, 3G and 4G wireless data networks.  The products are sold on the web and through the retail chain through regional and national stores like Wal-Mart, Best Buy, Kmart and Sears.  The products are available in the US, Canada, and the UK.

 

The popular stock has traded very heavily over the last three months, almost 1.6 million shares per day.  Chartists will love VG also as almost every form of technical analysis yields a very bullish signal not only in the short term, but intermediate and long term as well. 

 

This niche industry which combines cloud computing, telephony, and smart phone apps has turned the corner to profitability over the last year or so.  Vonage has had two consecutive profitable quarters and has made inroads into new markets like Brazil, where it recently reached a deal to partner with Datora Telecom to deliver communication services.

Our price target of $4.00 sometime in 2Q13 is a real possibility when VG announces 1Q13 results.

 

Have a great start to your week!

Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.

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