When it comes to shares of U.S. mobile service giant Verizon (NYSE:VZ), I think there is both some good, and some bad. This isn’t unusual. All stocks have both good and bad parts.

But, the unique thing about VZ stock is that its good and bad parts pretty much offset one another.

That is, for every reason to buy VZ stock today, there’s a reason to sell, and, ultimately, there really isn’t a compelling reason everyone should buy or sell VZ stock at the present moment.

Instead, the investment thesis on Verizon stock depends on who you are as an investor. Risk-adverse? Don’t like volatility? Looking for stability and steady income? Go ahead and buy this defensive giant with a huge moat in a secular growth industry, and a huge dividend, too.

Risk-seeking? Enjoy volatility? Looking for capital gains and to generate long-term alpha? Go ahead and skip this low-growth stock with intense margin pressures and history of going nowhere.

In the big picture, then, buying or steering clear of VZ stock all depends on what you’re looking for.

The Good About Verizon Stock

All of the good about Verizon stock harks back to two central themes — stability and consistency.

This is a defensive giant with a huge competitive moat in a secular growth industry. Simply consider the following train of logic:

  1. Americans are addicted to their digital devices, and this addiction is only growing with the proliferation of the Internet-of-Things and 5G.
  2. Verizon provides mobile and internet connectivity services to these internet-addicted Americans.
  3. This industry is an oligopoly, and many times it feels like a duopoly between Verizon and AT&T (NYSE:T), and the barriers to entry are big enough that we haven’t had a new and significant mobile carrier player enter the space in forever.
  4. Verizon has been and remains the cream-of-the-crop in the mobile service industry.

Stringing all those points together, the implications are obvious. Verizon is supported by steady demand, so revenues will forever remain stable. Lack of competition means margins will always remain respectable, so profits and cash flows will forever remain stable, too. The valuation is also highly reasonable at 12-times forward earnings.

Stable revenues, profits, and cash flows, alongside a reasonable valuation, imply that the VZ stock price won’t ever collapse (barring a black swan event) and that the dividend yield here (presently 4%) will remain rock-solid.

Big picture, then, if you’re looking to minimize volatility and risk, and maximize stability and steady income flows, VZ stock should be at the top of your Buy list.

The Bad About VZ

All of the bad about Verizon stock harks back to central theme — a lack of growth drivers.

According to YCharts, revenues at Verizon have risen a measly 3% over the past five years. Revenues are expected to rise 0.6% this year, and 1.6% next year — and that’s amid the once-in-a-decade 5G boom.

In other words, if you’re looking for revenue growth, there’s none to be found here. That’s because the North America mobile carrier service market is all dried up. Everyone who wants a mobile service plan, already has one. All the growth in the market is limited to price hikes and switching. That will never amount to much growth, and as a consequence, Verizon will forever be a low revenue grower.

At the same time, because the mobile service market isn’t expanding, the players in this market are resorting to price cutting tactics to steal customers and drive growth. These promotional price-cutting dynamics have significantly weighed on Verizon’s profit margins over the past few years, so as revenues haven’t gone anywhere, neither have profits. Earlier this year, it looked like the worst of this price-cutting was over. That isn’t the case. As recently as this month, AT&T announced a wave of deep price cuts in its mobile business.

Putting all that together, Verizon projects to be a low revenue and low profit growth company for the next several years. Stocks usually go as profits go. Thus, if profits barely nudge higher over the next few years, VZ stock will barely nudge higher, too.

Bottom Line on VZ Stock

The investment thesis on VZ stock depends entirely on what you’re looking for as an investor. If you’re looking for a stable stock that won’t return much in terms of capital gains but can be counted on for a steady 4% annual yield, then buy VZ. But, if you’re looking for a growth stock that will generate alpha and don’t care all that much about dividends, then skip it.

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