The stock of Ericsson (ERIC) is up about 20% since its mention in a previous post, “China and 5G Technology.” There should still be a meaningful opportunity ahead. Ericsson makes equipment that enables newer wireless communications, the fifth generation. Its competitors are Nokia, Samsung, and China’s Huawei.
Samsung, as most are aware, is a multinational conglomerate that is also involved in household appliances, personal technology devices, heavy equipment, and other products. Varied governments, including the US, UK, and India, express concern about Huawei and restrict or forbid its access to their networks. As of this writing, and pursuant to a quarterly report a week ago, Ericsson appears better positioned than Nokia.
Samsung, as most are aware, is a multinational conglomerate that is also involved in household appliances, personal technology devices, heavy equipment, and other products. Varied governments, including the US, UK, and India, express concern about Huawei and restrict or forbid its access to their networks. As of this writing, and pursuant to a quarterly report a week ago, Ericsson appears better positioned than Nokia.
The S&P 500 index (VOO) has influence on the stock market. Its biggest, heaviest-weighted companies are Microsoft (MSFT), Apple (AAPL), Amazon.com (AMZN), Alphabet (GOOGL), and Facebook (FB).
The CEOs of four of those companies just appeared before Congress, specifically a house Subcommittee on Antitrust, Commercial and Administrative Law. The representatives all sounded informed and prepared and had serious concerns about the tech giants (Alphabet, Apple and Amazon.com each being worth over $1 trillion). CEOs expressed respect and appreciation for the opportunity to testify; however, they did not always have adequate answers. This matter was one reason to suspect near-term pressure on the stock market.
Another is that the economy is not in good shape. Varied headlines discuss what could be a worst-ever quarterly decline. Data for unemployment–non-farm payrolls announced next Friday–are important. Even if surprisingly positive, there is obviously a difficult situation that is pervasive. This is another reason that there could be pressure on the stock market.
Because of long-term growth that is forecast as a result of 5G communications, ERIC remains a deal currently, at about $11.50. If it drops down with wider markets to $11 or under, my account should add shares. If it reaches or exceeds $13.78 in 2020, then some of the stock may be sold.
The author owns stock in ERIC and VOO.
11/9/2020 Ericsson is raising its margin target. Here is how its stock has done in comparison to the S&P 500 since September 11th, when it closed below $11.
The “D” shown at the beginning of October represents a dividend payment. As Ericsson is a foreign firm, its dividends are taxed. Despite the tax, the shares have outperformed. Having observed similar results of other international investment opportunities, it could be reasonable to discuss a domestic tax on dividends paid to foreign investors. Arithmetic implies that a levy of about 15% could meaningfully shore up social security, a program whose sustainability is questionable and can therefore be a political matter.