Less than three months later, I’m suggesting that you forget about Nokia stock and buy these two stocks instead. But before I get into why you should buy these two stocks, it’s important to note that I still believe that NOK can hit the 5G jackpot over the next 12-24 months, moving NOK stock into double digits.
A number of other InvestorPlace columnists are pro NOK, while others are con Nokia stock. I’m somewhere in the middle. If it wasn’t for Nokia’s dividend, I’d be negative on the shares. There are plenty of other stocks that have similar market caps to Nokia’s $30 billion and higher chances of rising. I searched for stocks, whose market caps were within $500 million of Nokia’s $30 billion market cap and came up with a total of nine stocks, two of which are worth considering.
Vroom Vroom Away From NOK Stock
According to Finviz.com, Ferrari (NYSE:RACE) has a market cap of $28.7 billion, putting it within $200 million of Nokia. Ferrari is having a great year in the markets, returning 53% in 2019. After taking its foot off the gas in 2018, RACE is back in fine form,.
That is, it’s back to delivering the high returns that shareholders have become accustomed to since Sergio Marchionne split off the sports car business from Fiat Chrysler (NYSE:FCAU) in 2015. The spinoff worked so well that Fiat Chrysler may do the same thing with Maserati.
“We see potential for Maserati to be a stand-alone entity (entwined with Alfa Romeo) by the end of 2018 ” Morgan Stanley analysts recently stated. “We forecast Maserati sales to double by 2027 and value the business at nearly €7bn or €4.40 per FCA share.”
I realize I’m supposed to be writing about Ferrari, but imitation is the highest form of flattery. Sergio Marchionne took Ferrari, one of the world’s most well-known car companies and separated it from Fiat Chrysler so that it could bring its sports cars to even more enthusiasts around the world.
Ferrari CEO Louis Camilleri plans to launch 15 new vehicles between this year and 2022. More importantly, he plans to raise Ferrari’s retail prices, generating even higher revenues for its shareholders. With a waiting list of almost three years, the company can continue to raise its prices, especially in China. As a result, Ferrari’s stock price will increase much more rapidly than NOK stock.
Paint the Town Red
According to Finviz.com, PPG (NYSE:PPG), which sells paints and coatings, has a market cap of $28.6 billion, putting it within $300 million of NOK. PPG ’s 2019 return, including dividends, is 19.5%. But that’s slightly below the U.S. stock market’s overall return.
Recently, PPG, which has made three unsuccessful efforts to buy Akzo Nobel (OTCMKTS:AKZOY) for as much as $29 billion, has been buying up smaller coatings companies. PPG is working with private equity firm Clayton, Dubilier & Rice in an attempt to buy Axalta Coating Systems (NYSE:AXTA). Warren Buffett’s company, Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B),owns 10.4% of Axalta, a stake he bought from Carlyle Group (NASDAQ:CG) in 2015.
Axalta has spent the past three months exploring strategic alternatives. I wouldn’t be surprised if Berkshire decides to help out with the acquisition of Axalta, which has $4.7 billion of annual revenue. But since Berkshire also owns Benjamin Moore, it probably would only lend money to the acquirers.
Paint businesses are great investments because demand for their products never goes away. Currently, however, PPG and the rest of its peers are facing significant headwinds, which have forced the company to cut its costs. But PPG has a solid balance sheet that can get it through most temporary slowdowns in demand. I see it as an excellent stock to buy on the occasional dip.
At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.