For the past five years, telecom giant Verizon Communications Inc. (NYSE:VZ) stock has done nothing but bounce between the mid-$40’s and mid-$50’s. Meanwhile, the S&P 500 has almost doubled. Needless to say, VZ stock has not been a winner.

But that could change in 2018 thanks to two big catalysts: tax reform and the beginning of a massive 5G roll-out.

Ahead of those two major catalysts, VZ stock is trading at just eight times trailing EBITDA, which is a pretty reasonable multiple for a steady growth telecom company.

Meanwhile, the company just reported strong fourth quarter numbers which underscore a strengthening wireless growth narrative alongside an improving cash flow situation.

All in all, VZ stock looks like a solid investment in 2018. This isn’t the type of stock that will make you rich overnight, but it will likely be a winner in 2018.

Here’s a deeper look.

Things are Picking up for Verizon

Verizon’s fourth quarter numbers lend themselves to one big takeaway: Verizon has a strengthening wireless growth narrative that will be able shake off wireline business weakness over the next several years thanks to a 5G roll-out and tax reform.

It is no secret that Verizon’s wireline business is not doing well. Organic revenues fell nearly 4% last quarter as cord-cutting pressures continued to weigh on operations.

Given the blowout subscriber numbers from Netflix, Inc. (NASDAQ:NFLX) and the fact that media giant Walt Disney Co (NYSE:DIS) is making a big push into over-the-top television, these cord-cutting pressures will likely accelerate into the foreseeable future. The outlook for Verizon’s wireline business is rather dour.

But the wireless business is steadily gaining momentum, even without the 5G catalyst. VZ just wrapped up its best smartphone net add year (1.8 million) since 2015.

The company also added 31,000 tablets and 1.3 million other connected devices, supporting the fact that VZ stock is more than just a smartphone play. It is an Internet-of-Things (IoT) play, too.

Meanwhile, churn is low where it matters. Retail postpaid phone churn was just 0.77%, marking the eleventh consecutive quarter of churn under 0.9%. Clearly, Verizon customer loyalty is high.

As it currently stands, Verizon has a burgeoning wireless business and a struggling wireline business. That is a perfectly healthy combination because the strong wireless business is the big profit driver (85% of total EBITDA).

This means that even without the tax reform and 5G catalysts, VZ stock should track higher on improving underlying financials.

But those financials are set to get a big boost in 2018. Management believes tax reform will provide a $3.5 to $4 billion uplift to cash flows.

All that means is nearly $4 billion more to invest in growth opportunities and give back to shareholders. That translates to accretive acquisitions, bigger growth potential, and a bigger dividend – all positives for shareholders.

Verizon’s numbers are also set to improve thanks to a forthcoming 5G roll-out. VZ has long been considered the best in class in the wireless telecom market. Consumers continually choose Verizon because they have the most robust coverage.

But the Verizon coverage gap is shrinking, giving credence to arguments like, “why pay more for essentially the same coverage?” Essentially, as coverage reliability has become commoditized, VZ has lost pricing power, margins have compressed, and profits have eroded.

But the 5G roll-out changes all that. 5G provides Verizon an opportunity once again differentiate itself from the competition. If it does that, VZ can hike prices, margins will widen, and profits will soar.

Considering Verizon led the wireless industry’s transformation from analog to 4G LTE service, they will likely lead the market in its next big leap to 5G. Indeed, Verizon is already planning to bring three to five cities online this year with commercial 5G services. That schedule puts them well ahead of peers.

Bottom Line on VZ Stock

It won’t make you rich overnight, but it is a solid investment in 2018 thanks to major forthcoming catalysts. Tax reform will give the company a bunch more cash to work with, leading to bigger growth opportunities and a bigger dividend.

The 5G roll-out is an opportunity for Verizon to differentiate itself from the pack, and thereby regain pricing power, expand margins, and supercharge profit growth.

Bottom line: stick with VZ stock for 2018. This could be the year VZ breaks out of its multi-year trading range.

As of this writing, Luke Lango was long VZ, NFLX, and DIS.