The Motley Fool

3 Reasons To Sell Shares In Vodafone plc


Everybody loves bid rumours and speculation.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Indeed, there seems to be little better than a dollop of merger and acquisition talk to ramp up a share price to exceptionally high levels. Great if you hold the shares, frustrating if you were thinking of buying them before their rise.

Indeed, bid speculation has been a major reason for the significant share-price gains made by Vodafone (LSE: VOD) (NASDAQ: VOD.US) in recent months. The shares were as low as 160p in February, reached 200p in May and now trade around 179p.

Of course, recent news flow on the company has been dominated by Vodafone’s takeover of Kabel Deutschland for €7.7 billion.

According to some analysts, this bid increases the chances of a sale of Vodafone’s 45% stake in Verizon Wireless, which is a joint venture between the British telecoms behemoth and US peer Verizon Communications.

So, with the deal to purchase Kabel Deutschland not appearing to have dampened the Verizon speculation, many investors could be left thinking that, with a bid still possible, Vodafone shares may be worth a look.

However, I believe that Vodafone is a ‘sell’ for the following three reasons:

1) Profitability has been poor for a number of years; return on equity has failed to reach double digits in any of the last five years.

2) Verizon Wireless is the ‘crown jewel’ in Vodafone’s locker. The rest of the business is failing to make notable gains, particularly in India where tax issues continue to hold the company back.

3) The shares seem to be at least partly pricing in the sale of Vodafone’s stake in Verizon Wireless. Any disappointment on this front could lead to a substantial share-price fall.

I do not own shares in Vodafone, nor do I intend to buy them just in case there is a bid for the Verizon Wireless stake.

In fact, I can think of better places to invest my hard-earned cash and would recommend that if you too are looking for alternative opportunities in the FTSE 100, this exclusive wealth report reviews five particularly attractive possibilities.

All five blue chips offer a mix of robust prospects, illustrious histories and dependable dividends, and have just been declared by The Motley Fool as “5 Shares You Can Retire On“.

Simply click here for the report — it’s completely free!

> Peter does not own any share mentioned in this article. The Motley Fool has recommended shares in Vodafone.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.